Correlation Between Selective Insurance and Bank of America
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Bank of America at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Selective Insurance and Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selective Insurance Group and Verizon Communications, you can compare the effects of market volatilities on Selective Insurance and Bank of America and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Selective Insurance with a short position of Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Bank of America.
Diversification Opportunities for Selective Insurance and Bank of America
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Selective and Bank is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Verizon Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verizon Communications and Selective Insurance is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Selective Insurance Group are associated (or correlated) with Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verizon Communications has no effect on the direction of Selective Insurance i.e., Selective Insurance and Bank of America go up and down completely randomly.
Pair Corralation between Selective Insurance and Bank of America
Assuming the 90 days horizon Selective Insurance is expected to generate 1.36 times less return on investment than Bank of America. In addition to that, Selective Insurance is 1.74 times more volatile than Verizon Communications. It trades about 0.12 of its total potential returns per unit of risk. Verizon Communications is currently generating about 0.28 per unit of volatility. If you would invest 3,837 in Verizon Communications on August 27, 2024 and sell it today you would earn a total of 291.00 from holding Verizon Communications or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. Verizon Communications
Performance |
| Timeline |
| Selective Insurance |
| Verizon Communications |
Selective Insurance and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Bank of America
The main advantage of trading using opposite Selective Insurance and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Bank of America can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bank of America will offset losses from the drop in Bank of America's long position.| Selective Insurance vs. Haier Smart Home | Selective Insurance vs. Strategic Education | Selective Insurance vs. American Public Education | Selective Insurance vs. Japan Tobacco |
| Bank of America vs. MSAD INSURANCE | Bank of America vs. Selective Insurance Group | Bank of America vs. LIFENET INSURANCE CO | Bank of America vs. Singapore Telecommunications Limited |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |