Correlation Between Selective Insurance and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and SLR Investment 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 SLR Investment 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 SLR Investment Corp, you can compare the effects of market volatilities on Selective Insurance and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and SLR Investment.
Diversification Opportunities for Selective Insurance and SLR Investment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Selective and SLR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Selective Insurance i.e., Selective Insurance and SLR Investment go up and down completely randomly.
Pair Corralation between Selective Insurance and SLR Investment
Assuming the 90 days horizon Selective Insurance is expected to generate 27.63 times less return on investment than SLR Investment. In addition to that, Selective Insurance is 1.71 times more volatile than SLR Investment Corp. It trades about 0.0 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.11 per unit of volatility. If you would invest 1,208 in SLR Investment Corp on September 14, 2024 and sell it today you would earn a total of 401.00 from holding SLR Investment Corp or generate 33.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. SLR Investment Corp
Performance |
| Timeline |
| Selective Insurance |
| SLR Investment Corp |
Selective Insurance and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and SLR Investment
The main advantage of trading using opposite Selective Insurance and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's 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 |
| SLR Investment vs. QBE Insurance Group | SLR Investment vs. Selective Insurance Group | SLR Investment vs. Summit Materials | SLR Investment vs. REVO INSURANCE SPA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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