Correlation Between Selective Insurance and Hannover Rück
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Hannover Rück 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 Hannover Rück 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 Hannover Rck SE, you can compare the effects of market volatilities on Selective Insurance and Hannover Rück 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 Hannover Rück. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Hannover Rück.
Diversification Opportunities for Selective Insurance and Hannover Rück
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Selective and Hannover is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Hannover Rck SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannover Rck SE 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 Hannover Rück. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannover Rck SE has no effect on the direction of Selective Insurance i.e., Selective Insurance and Hannover Rück go up and down completely randomly.
Pair Corralation between Selective Insurance and Hannover Rück
Assuming the 90 days horizon Selective Insurance is expected to generate 1.7 times less return on investment than Hannover Rück. In addition to that, Selective Insurance is 1.33 times more volatile than Hannover Rck SE. It trades about 0.02 of its total potential returns per unit of risk. Hannover Rck SE is currently generating about 0.06 per unit of volatility. If you would invest 18,497 in Hannover Rck SE on September 4, 2024 and sell it today you would earn a total of 6,863 from holding Hannover Rck SE or generate 37.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Selective Insurance Group vs. Hannover Rck SE
Performance |
| Timeline |
| Selective Insurance |
| Hannover Rck SE |
Selective Insurance and Hannover Rück Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and Hannover Rück
The main advantage of trading using opposite Selective Insurance and Hannover Rück positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Hannover Rück 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 Hannover Rück will offset losses from the drop in Hannover Rück's long position.| Selective Insurance vs. The Progressive | Selective Insurance vs. The Allstate | Selective Insurance vs. PICC Property and | Selective Insurance vs. Fairfax Financial Holdings |
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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 Stocks Directory module to find actively traded stocks across global markets.
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