Correlation Between W R and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both W R and Selective 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 W R and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W R Berkley and Selective Insurance Group, you can compare the effects of market volatilities on W R 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 W R with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of W R and Selective Insurance.
Diversification Opportunities for W R and Selective Insurance
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between WRB-PE and Selective is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding W R Berkley and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and W R 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 W R Berkley 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 W R i.e., W R and Selective Insurance go up and down completely randomly.
Pair Corralation between W R and Selective Insurance
Assuming the 90 days trading horizon W R Berkley is expected to under-perform the Selective Insurance. But the preferred stock apears to be less risky and, when comparing its historical volatility, W R Berkley is 3.77 times less risky than Selective Insurance. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Selective Insurance Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 9,122 in Selective Insurance Group on August 28, 2024 and sell it today you would earn a total of 743.00 from holding Selective Insurance Group or generate 8.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
W R Berkley vs. Selective Insurance Group
Performance |
| Timeline |
| W R Berkley |
| Selective Insurance |
W R and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with W R and Selective Insurance
The main advantage of trading using opposite W R and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W R 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.| W R vs. Aspen Insurance Holdings | W R vs. Aspen Insurance Holdings | W R vs. Argo Group International | W R vs. AmTrust Financial Services |
| Selective Insurance vs. Kemper | Selective Insurance vs. Donegal Group B | Selective Insurance vs. Argo Group International | Selective Insurance vs. Global Indemnity PLC |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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