Correlation Between Selective Insurance and First Quantum
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and First Quantum 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 First Quantum 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 First Quantum Minerals, you can compare the effects of market volatilities on Selective Insurance and First Quantum 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 First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and First Quantum.
Diversification Opportunities for Selective Insurance and First Quantum
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Selective and First is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals 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 First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of Selective Insurance i.e., Selective Insurance and First Quantum go up and down completely randomly.
Pair Corralation between Selective Insurance and First Quantum
Assuming the 90 days horizon Selective Insurance Group is expected to generate 0.37 times more return on investment than First Quantum. However, Selective Insurance Group is 2.68 times less risky than First Quantum. It trades about 0.01 of its potential returns per unit of risk. First Quantum Minerals is currently generating about -0.01 per unit of risk. If you would invest 9,118 in Selective Insurance Group on September 12, 2024 and sell it today you would lose (68.00) from holding Selective Insurance Group or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. First Quantum Minerals
Performance |
| Timeline |
| Selective Insurance |
| First Quantum Minerals |
Selective Insurance and First Quantum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and First Quantum
The main advantage of trading using opposite Selective Insurance and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, First Quantum 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 First Quantum will offset losses from the drop in First Quantum's long position.| Selective Insurance vs. QBE Insurance Group | Selective Insurance vs. Insurance Australia Group | Selective Insurance vs. Superior Plus Corp | Selective Insurance vs. SIVERS SEMICONDUCTORS AB |
| First Quantum vs. Microbot Medical | First Quantum vs. CyberArk Software | First Quantum vs. AXWAY SOFTWARE EO | First Quantum vs. Luckin Coffee |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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