Correlation Between Teva Pharmaceutical and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both Teva Pharmaceutical and Safety Insurance 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 Teva Pharmaceutical and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teva Pharmaceutical Industries and Safety Insurance Group, you can compare the effects of market volatilities on Teva Pharmaceutical and Safety Insurance 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 Teva Pharmaceutical with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharmaceutical and Safety Insurance.
Diversification Opportunities for Teva Pharmaceutical and Safety Insurance
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Teva and Safety is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharmaceutical Industries and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and Teva Pharmaceutical 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 Teva Pharmaceutical Industries are associated (or correlated) with Safety Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Insurance has no effect on the direction of Teva Pharmaceutical i.e., Teva Pharmaceutical and Safety Insurance go up and down completely randomly.
Pair Corralation between Teva Pharmaceutical and Safety Insurance
Assuming the 90 days horizon Teva Pharmaceutical Industries is expected to generate 3.03 times more return on investment than Safety Insurance. However, Teva Pharmaceutical is 3.03 times more volatile than Safety Insurance Group. It trades about 0.17 of its potential returns per unit of risk. Safety Insurance Group is currently generating about -0.05 per unit of risk. If you would invest 1,535 in Teva Pharmaceutical Industries on October 17, 2024 and sell it today you would earn a total of 455.00 from holding Teva Pharmaceutical Industries or generate 29.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teva Pharmaceutical Industries vs. Safety Insurance Group
Performance |
| Timeline |
| Teva Pharmaceutical |
| Safety Insurance |
Teva Pharmaceutical and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teva Pharmaceutical and Safety Insurance
The main advantage of trading using opposite Teva Pharmaceutical and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teva Pharmaceutical position performs unexpectedly, Safety Insurance 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 Safety Insurance will offset losses from the drop in Safety Insurance's long position.| Teva Pharmaceutical vs. Safety Insurance Group | Teva Pharmaceutical vs. VIENNA INSURANCE GR | Teva Pharmaceutical vs. 24SEVENOFFICE GROUP AB | Teva Pharmaceutical vs. Air Transport Services |
| Safety Insurance vs. SEKISUI CHEMICAL | Safety Insurance vs. SBM OFFSHORE | Safety Insurance vs. Mitsubishi Gas Chemical | Safety Insurance vs. CSSC Offshore Marine |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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