Correlation Between Selective Insurance and Singapore Reinsurance
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance, you can compare the effects of market volatilities on Selective Insurance and Singapore Reinsurance 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 Singapore Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Singapore Reinsurance.
Diversification Opportunities for Selective Insurance and Singapore Reinsurance
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Selective and Singapore is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance 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 Singapore Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Reinsurance has no effect on the direction of Selective Insurance i.e., Selective Insurance and Singapore Reinsurance go up and down completely randomly.
Pair Corralation between Selective Insurance and Singapore Reinsurance
Assuming the 90 days horizon Selective Insurance Group is expected to under-perform the Singapore Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, Selective Insurance Group is 1.06 times less risky than Singapore Reinsurance. The stock trades about -0.13 of its potential returns per unit of risk. The Singapore Reinsurance is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,760 in Singapore Reinsurance on February 17, 2024 and sell it today you would lose (140.00) from holding Singapore Reinsurance or give up 5.07% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Selective Insurance Group vs. Singapore Reinsurance
Performance |
Timeline |
Selective Insurance |
Singapore Reinsurance |
Selective Insurance and Singapore Reinsurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Selective Insurance and Singapore Reinsurance
The main advantage of trading using opposite Selective Insurance and Singapore Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Singapore Reinsurance 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 Singapore Reinsurance will offset losses from the drop in Singapore Reinsurance's long position.Selective Insurance vs. Cincinnati Financial | Selective Insurance vs. Superior Plus Corp | Selective Insurance vs. CITIUS RESOURCES LS 005 | Selective Insurance vs. Origin Agritech |
Singapore Reinsurance vs. SHIMANO INC UNSPADR10 | Singapore Reinsurance vs. Li Ning Company | Singapore Reinsurance vs. Oriental Land Co | Singapore Reinsurance vs. ANTA Sports Products |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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