Correlation Between Arthur J and Selective Insurance

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

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

Diversification Opportunities for Arthur J and Selective Insurance

0.54

Correlation Coefficient

Arthur J  Selective Insurance

Very weak diversification

The 3 months correlation between Arthur and Selective is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Arthur J Gallagher and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Arthur J 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 Arthur J Gallagher are associated (or correlated) with Selective Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selective Insurance has no effect on the direction of Arthur J i.e., Arthur J and Selective Insurance go up and down completely randomly.

Pair Corralation between Arthur J and Selective Insurance

Considering the 90-day investment horizon Arthur J Gallagher is expected to under-perform the Selective Insurance. In addition to that, Arthur J is 1.09 times more volatile than Selective Insurance Group. It trades about -0.2 of its total potential returns per unit of risk. Selective Insurance Group is currently generating about -0.02 per unit of volatility. If you would invest  7,930  in Selective Insurance Group on September 6, 2025 and sell it today you would lose (178.00) from holding Selective Insurance Group or give up 2.24% of portfolio value over 90 days.

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

Arthur J Gallagher  vs.  Selective Insurance Group

Arthur J Gallagher

Risk-Adjusted Performance

Weakest

Over the last 90 days Arthur J Gallagher has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in January 2026. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Selective Insurance

Risk-Adjusted Performance

Weakest

Over the last 90 days Selective Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Selective Insurance is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Arthur J and Selective Insurance

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

The idea behind Arthur J Gallagher and Selective Insurance 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.