Correlation Between Selective Insurance and PICC Property
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and PICC Property 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 PICC Property 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 PICC Property and, you can compare the effects of market volatilities on Selective Insurance and PICC Property 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 PICC Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and PICC Property.
Diversification Opportunities for Selective Insurance and PICC Property
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Selective and PICC is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and PICC Property and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICC Property 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 PICC Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICC Property has no effect on the direction of Selective Insurance i.e., Selective Insurance and PICC Property go up and down completely randomly.
Pair Corralation between Selective Insurance and PICC Property
Assuming the 90 days horizon Selective Insurance is expected to generate 17.93 times less return on investment than PICC Property. But when comparing it to its historical volatility, Selective Insurance Group is 3.48 times less risky than PICC Property. It trades about 0.03 of its potential returns per unit of risk. PICC Property and is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 51.00 in PICC Property and on September 1, 2024 and sell it today you would earn a total of 88.00 from holding PICC Property and or generate 172.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Selective Insurance Group vs. PICC Property and
Performance |
| Timeline |
| Selective Insurance |
| PICC Property |
Selective Insurance and PICC Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and PICC Property
The main advantage of trading using opposite Selective Insurance and PICC Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, PICC Property 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 PICC Property will offset losses from the drop in PICC Property's long position.The idea behind Selective Insurance Group and PICC Property and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PICC Property vs. EMBARK EDUCATION LTD | PICC Property vs. DEVRY EDUCATION GRP | PICC Property vs. TAL Education Group | PICC Property vs. ScanSource |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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