Correlation Between RCS MediaGroup and Safety Insurance
Can any of the company-specific risk be diversified away by investing in both RCS MediaGroup 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 RCS MediaGroup and Safety Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCS MediaGroup SpA and Safety Insurance Group, you can compare the effects of market volatilities on RCS MediaGroup 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 RCS MediaGroup with a short position of Safety Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCS MediaGroup and Safety Insurance.
Diversification Opportunities for RCS MediaGroup and Safety Insurance
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RCS and Safety is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Safety Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Insurance and RCS MediaGroup 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 RCS MediaGroup SpA 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 RCS MediaGroup i.e., RCS MediaGroup and Safety Insurance go up and down completely randomly.
Pair Corralation between RCS MediaGroup and Safety Insurance
Assuming the 90 days trading horizon RCS MediaGroup SpA is expected to generate 1.35 times more return on investment than Safety Insurance. However, RCS MediaGroup is 1.35 times more volatile than Safety Insurance Group. It trades about 0.14 of its potential returns per unit of risk. Safety Insurance Group is currently generating about -0.1 per unit of risk. If you would invest 82.00 in RCS MediaGroup SpA on December 1, 2024 and sell it today you would earn a total of 16.00 from holding RCS MediaGroup SpA or generate 19.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
RCS MediaGroup SpA vs. Safety Insurance Group
Performance |
Timeline |
RCS MediaGroup SpA |
Risk-Adjusted Performance
Good
Weak | Strong |
Safety Insurance |
RCS MediaGroup and Safety Insurance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with RCS MediaGroup and Safety Insurance
The main advantage of trading using opposite RCS MediaGroup and Safety Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup 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.RCS MediaGroup vs. Dairy Farm International | RCS MediaGroup vs. Daito Trust Construction | RCS MediaGroup vs. Algonquin Power Utilities | RCS MediaGroup vs. Adtalem Global Education |
Safety Insurance vs. Ross Stores | Safety Insurance vs. MICRONIC MYDATA | Safety Insurance vs. MARKET VECTR RETAIL | Safety Insurance vs. H2O Retailing |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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