Correlation Between Selective Insurance and Arthur J

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

Diversification Opportunities for Selective Insurance and Arthur J

0.66

Correlation Coefficient

Selective Insurance  Arthur J

Poor diversification

The 3 months correlation between Selective and Arthur is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Arthur J Gallagher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arthur J Gallagher 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 Arthur J. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arthur J Gallagher has no effect on the direction of Selective Insurance i.e., Selective Insurance and Arthur J go up and down completely randomly.

Pair Corralation between Selective Insurance and Arthur J

Given the investment horizon of 90 days Selective Insurance Group is expected to under-perform the Arthur J. In addition to that, Selective Insurance is 1.89 times more volatile than Arthur J Gallagher. It trades about -0.03 of its total potential returns per unit of risk. Arthur J Gallagher is currently generating about -0.04 per unit of volatility. If you would invest  31,472  in Arthur J Gallagher on July 12, 2025 and sell it today you would lose (1,298) from holding Arthur J Gallagher or give up 4.12% of portfolio value over 90 days.

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

Selective Insurance Group  vs.  Arthur J Gallagher

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.

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 nearly stable forward-looking indicators, Arthur J is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Selective Insurance and Arthur J

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

The idea behind Selective Insurance Group and Arthur J Gallagher 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.