Correlation Between Volkswagen and Selective Insurance
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By analyzing existing cross correlation between Volkswagen AG VZO and Selective Insurance Group, you can compare the effects of market volatilities on Volkswagen and Selective 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 Volkswagen with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Selective Insurance.
Diversification Opportunities for Volkswagen and Selective Insurance
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Volkswagen and Selective is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG VZO and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Volkswagen 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 Volkswagen AG VZO are associated (or correlated) with Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Volkswagen i.e., Volkswagen and Selective Insurance go up and down completely randomly.
Pair Corralation between Volkswagen and Selective Insurance
Assuming the 90 days trading horizon Volkswagen AG VZO is expected to under-perform the Selective Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG VZO is 1.53 times less risky than Selective Insurance. The stock trades about -0.3 of its potential returns per unit of risk. The Selective Insurance Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 8,416 in Selective Insurance Group on September 1, 2024 and sell it today you would earn a total of 884.00 from holding Selective Insurance Group or generate 10.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Volkswagen AG VZO vs. Selective Insurance Group
Performance |
| Timeline |
| Volkswagen AG VZO |
| Selective Insurance |
Volkswagen and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Selective Insurance
The main advantage of trading using opposite Volkswagen and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Selective 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 Selective Insurance will offset losses from the drop in Selective Insurance's long position.The idea behind Volkswagen AG VZO and Selective Insurance Group 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.| Selective Insurance vs. The Progressive | Selective Insurance vs. Fairfax Financial Holdings | Selective Insurance vs. Insurance Australia Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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