Correlation Between Cayson Acquisition and Selective Insurance

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

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

Diversification Opportunities for Cayson Acquisition and Selective Insurance

0.27

Correlation Coefficient

Cayson Acquisition  Selective Insurance

Modest diversification

The 3 months correlation between Cayson and Selective is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cayson Acquisition Corp and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Cayson Acquisition 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 Cayson Acquisition Corp 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 Cayson Acquisition i.e., Cayson Acquisition and Selective Insurance go up and down completely randomly.

Pair Corralation between Cayson Acquisition and Selective Insurance

Assuming the 90 days horizon Cayson Acquisition Corp is expected to under-perform the Selective Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Cayson Acquisition Corp is 2.45 times less risky than Selective Insurance. The stock trades about -0.11 of its potential returns per unit of risk. The Selective Insurance Group is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  8,575  in Selective Insurance Group on May 28, 2025 and sell it today you would lose (784.00) from holding Selective Insurance Group or give up 9.14% of portfolio value over 90 days.

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

Cayson Acquisition Corp  vs.  Selective Insurance Group

Cayson Acquisition Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days Cayson Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Cayson Acquisition and Selective Insurance

The main advantage of trading using opposite Cayson Acquisition and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cayson Acquisition 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 Cayson Acquisition Corp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.