Correlation Between Safety Insurance and HF SINCLAIR

Can any of the company-specific risk be diversified away by investing in both Safety Insurance and HF SINCLAIR 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 HF SINCLAIR 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 HF SINCLAIR P, you can compare the effects of market volatilities on Safety Insurance and HF SINCLAIR 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 HF SINCLAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and HF SINCLAIR.

Diversification Opportunities for Safety Insurance and HF SINCLAIR

-0.28

Correlation Coefficient

Safety Insurance  HF SINCLAIR

Very good diversification

The 3 months correlation between Safety and HL80 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and HF SINCLAIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HF SINCLAIR P 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 HF SINCLAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HF SINCLAIR P has no effect on the direction of Safety Insurance i.e., Safety Insurance and HF SINCLAIR go up and down completely randomly.

Pair Corralation between Safety Insurance and HF SINCLAIR

Assuming the 90 days horizon Safety Insurance Group is expected to generate 0.87 times more return on investment than HF SINCLAIR. However, Safety Insurance Group is 1.15 times less risky than HF SINCLAIR. It trades about 0.14 of its potential returns per unit of risk. HF SINCLAIR P is currently generating about -0.21 per unit of risk. If you would invest  7,168  in Safety Insurance Group on September 26, 2024 and sell it today you would earn a total of  682.00  from holding Safety Insurance Group or generate 9.51% return on investment over 90 days.

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

Safety Insurance Group  vs.  HF SINCLAIR P

Safety Insurance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safety Insurance Group are ranked lower than 7 (%) 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 January 2025.

HF SINCLAIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HF SINCLAIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Safety Insurance and HF SINCLAIR

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

The idea behind Safety Insurance Group and HF SINCLAIR P 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..