Correlation Between Selective Insurance and Mizuno
Can any of the company-specific risk be diversified away by investing in both Selective Insurance and Mizuno 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 Mizuno 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 Mizuno, you can compare the effects of market volatilities on Selective Insurance and Mizuno 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 Mizuno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selective Insurance and Mizuno.
Diversification Opportunities for Selective Insurance and Mizuno
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Selective and Mizuno is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Mizuno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuno 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 Mizuno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizuno has no effect on the direction of Selective Insurance i.e., Selective Insurance and Mizuno go up and down completely randomly.
Pair Corralation between Selective Insurance and Mizuno
Assuming the 90 days horizon Selective Insurance is expected to generate 1.81 times less return on investment than Mizuno. But when comparing it to its historical volatility, Selective Insurance Group is 1.47 times less risky than Mizuno. It trades about 0.04 of its potential returns per unit of risk. Mizuno is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,150 in Mizuno on October 6, 2024 and sell it today you would earn a total of 300.00 from holding Mizuno or generate 5.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.36% |
Values | Daily Returns |
Selective Insurance Group vs. Mizuno
Performance |
Timeline |
Selective Insurance |
Mizuno |
Selective Insurance and Mizuno Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Selective Insurance and Mizuno
The main advantage of trading using opposite Selective Insurance and Mizuno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selective Insurance position performs unexpectedly, Mizuno 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 Mizuno will offset losses from the drop in Mizuno's long position.Selective Insurance vs. De Grey Mining | Selective Insurance vs. SENECA FOODS A | Selective Insurance vs. CAL MAINE FOODS | Selective Insurance vs. Jacquet Metal Service |
Mizuno vs. Tencent Music Entertainment | Mizuno vs. MPH Health Care | Mizuno vs. Nexstar Media Group | Mizuno vs. Grupo Media Capital |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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