Correlation Between Selective Insurance and W R
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and W R 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 W R 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 W R Berkley, you can compare the effects of market volatilities on Selective Insurance and W R 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 W R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and W R.
Diversification Opportunities for Selective Insurance and W R
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Selective and WRB is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and W R Berkley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W R Berkley 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 W R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W R Berkley has no effect on the direction of Selective Insurance i.e., Selective Insurance and W R go up and down completely randomly.
Pair Corralation between Selective Insurance and W R
Given the investment horizon of 90 days Selective Insurance is expected to generate 1.07 times less return on investment than W R. In addition to that, Selective Insurance is 1.04 times more volatile than W R Berkley. It trades about 0.03 of its total potential returns per unit of risk. W R Berkley is currently generating about 0.04 per unit of volatility. If you would invest 6,621 in W R Berkley on January 24, 2024 and sell it today you would earn a total of 1,722 from holding W R Berkley or generate 26.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selective Insurance Group vs. W R Berkley
Performance |
| Timeline |
| Selective Insurance |
| W R Berkley |
Selective Insurance and W R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selective Insurance and W R
The main advantage of trading using opposite Selective Insurance and W R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, W R 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 W R will offset losses from the drop in W R's long position.| Selective Insurance vs. Aquagold International | Selective Insurance vs. Thrivent High Yield | Selective Insurance vs. Morningstar Unconstrained Allocation | Selective Insurance vs. Via Renewables |
| W R vs. Aquagold International | W R vs. Thrivent High Yield | W R vs. Morningstar Unconstrained Allocation | W R vs. Via Renewables |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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