Correlation Between Seven West and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both Seven West 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 Seven West and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Safety Insurance Group, you can compare the effects of market volatilities on Seven West 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 Seven West with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Safety Insurance.
Diversification Opportunities for Seven West and Safety Insurance
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Seven and Safety is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and Seven West 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 Seven West Media 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 Seven West i.e., Seven West and Safety Insurance go up and down completely randomly.
Pair Corralation between Seven West and Safety Insurance
Assuming the 90 days horizon Seven West Media is expected to under-perform the Safety Insurance. In addition to that, Seven West is 1.84 times more volatile than Safety Insurance Group. It trades about -0.05 of its total potential returns per unit of risk. Safety Insurance Group is currently generating about 0.27 per unit of volatility. If you would invest 7,200 in Safety Insurance Group on September 1, 2024 and sell it today you would earn a total of 800.00 from holding Safety Insurance Group or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven West Media vs. Safety Insurance Group
Performance |
| Timeline |
| Seven West Media |
| Safety Insurance |
Seven West and Safety Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and Safety Insurance
The main advantage of trading using opposite Seven West and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West 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.| Seven West vs. Live Nation Entertainment | Seven West vs. Fuji Media Holdings | Seven West vs. Rai Way SpA | Seven West vs. Superior Plus Corp |
| Safety Insurance vs. The Progressive | Safety Insurance vs. Fairfax Financial Holdings | Safety 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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