Correlation Between Selective Insurance and Naturgy Energy

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

Diversification Opportunities for Selective Insurance and Naturgy Energy

0.0

Correlation Coefficient

Selective Insurance  Naturgy Energy

Pay attention - limited upside

The 3 months correlation between Selective and Naturgy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy Group 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 Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of Selective Insurance i.e., Selective Insurance and Naturgy Energy go up and down completely randomly.

Pair Corralation between Selective Insurance and Naturgy Energy

If you would invest  0.00  in Naturgy Energy Group on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Naturgy Energy Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.34%
Values	Daily Returns

Selective Insurance Group  vs.  Naturgy Energy Group

Selective Insurance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Selective Insurance Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Selective Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Naturgy Energy Group

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Naturgy Energy Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Naturgy Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Selective Insurance and Naturgy Energy

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

The idea behind Selective Insurance Group and Naturgy Energy Group 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.