Correlation Between Entravision Communications and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Entravision Communications 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 Entravision Communications and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Selective Insurance Group, you can compare the effects of market volatilities on Entravision Communications 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 Entravision Communications with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Selective Insurance.
Diversification Opportunities for Entravision Communications and Selective Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entravision and Selective is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Entravision Communications 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 Entravision Communications 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 Entravision Communications i.e., Entravision Communications and Selective Insurance go up and down completely randomly.
Pair Corralation between Entravision Communications and Selective Insurance
Assuming the 90 days horizon Entravision Communications is expected to generate 3.36 times more return on investment than Selective Insurance. However, Entravision Communications is 3.36 times more volatile than Selective Insurance Group. It trades about 0.04 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.09 per unit of risk. If you would invest 231.00 in Entravision Communications on September 25, 2024 and sell it today you would earn a total of 5.00 from holding Entravision Communications or generate 2.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Entravision Communications vs. Selective Insurance Group
Performance |
Timeline |
Entravision Communications |
Selective Insurance |
Entravision Communications and Selective Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Entravision Communications and Selective Insurance
The main advantage of trading using opposite Entravision Communications and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications 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.Entravision Communications vs. VIVENDI UNSPONARD EO | Entravision Communications vs. News Corporation | Entravision Communications vs. News Corporation | Entravision Communications vs. RTL Group SA |
Selective Insurance vs. Consolidated Communications Holdings | Selective Insurance vs. JIAHUA STORES | Selective Insurance vs. Entravision Communications | Selective Insurance vs. BJs Wholesale Club |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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