Correlation Between Selective Insurance and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on Selective Insurance and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Chesapeake Utilities.
Diversification Opportunities for Selective Insurance and Chesapeake Utilities
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Selective and Chesapeake is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Selective Insurance i.e., Selective Insurance and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Selective Insurance and Chesapeake Utilities
Assuming the 90 days horizon Selective Insurance Group is expected to under-perform the Chesapeake Utilities. In addition to that, Selective Insurance is 1.1 times more volatile than Chesapeake Utilities. It trades about -0.21 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.01 per unit of volatility. If you would invest 12,000 in Chesapeake Utilities on September 15, 2024 and sell it today you would earn a total of 0.00 from holding Chesapeake Utilities or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. Chesapeake Utilities
Performance |
| Timeline |
| Selective Insurance |
| Chesapeake Utilities |
Selective Insurance and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Chesapeake Utilities
The main advantage of trading using opposite Selective Insurance and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Selective Insurance vs. Insurance Australia Group | Selective Insurance vs. Superior Plus Corp | Selective Insurance vs. SIVERS SEMICONDUCTORS AB | Selective Insurance vs. CHINA HUARONG ENERHD 50 |
| Chesapeake Utilities vs. Thai Beverage Public | Chesapeake Utilities vs. Monster Beverage Corp | Chesapeake Utilities vs. Suntory Beverage Food | Chesapeake Utilities vs. Perseus Mining 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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