Correlation Between Safety Insurance and AXWAY SOFTWARE

Can any of the company-specific risk be diversified away by investing in both Safety Insurance and AXWAY SOFTWARE 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 Safety Insurance and AXWAY SOFTWARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Safety Insurance Group and AXWAY SOFTWARE EO, you can compare the effects of market volatilities on Safety Insurance and AXWAY SOFTWARE 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 Safety Insurance with a short position of AXWAY SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and AXWAY SOFTWARE.

Diversification Opportunities for Safety Insurance and AXWAY SOFTWARE

0.59

Correlation Coefficient

Safety Insurance  AXWAY SOFTWARE

Very weak diversification

The 3 months correlation between Safety and AXWAY is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and AXWAY SOFTWARE EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXWAY SOFTWARE EO and Safety 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 Safety Insurance Group are associated (or correlated) with AXWAY SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXWAY SOFTWARE EO has no effect on the direction of Safety Insurance i.e., Safety Insurance and AXWAY SOFTWARE go up and down completely randomly.

Pair Corralation between Safety Insurance and AXWAY SOFTWARE

Assuming the 90 days horizon Safety Insurance Group is expected to generate 1.04 times more return on investment than AXWAY SOFTWARE. However, Safety Insurance is 1.04 times more volatile than AXWAY SOFTWARE EO. It trades about 0.12 of its potential returns per unit of risk. AXWAY SOFTWARE EO is currently generating about 0.08 per unit of risk. If you would invest  7,119  in Safety Insurance Group on October 10, 2024 and sell it today you would earn a total of  781.00  from holding Safety Insurance Group or generate 10.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Safety Insurance Group  vs.  AXWAY SOFTWARE EO

Safety Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Insurance Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Safety Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AXWAY SOFTWARE EO

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AXWAY SOFTWARE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Safety Insurance and AXWAY SOFTWARE

The main advantage of trading using opposite Safety Insurance and AXWAY SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, AXWAY SOFTWARE 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 AXWAY SOFTWARE will offset losses from the drop in AXWAY SOFTWARE's long position.

The idea behind Safety Insurance Group and AXWAY SOFTWARE EO pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.