Correlation Between Selective Insurance and Argo Group

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

Diversification Opportunities for Selective Insurance and Argo Group

-0.32

Correlation Coefficient

Selective Insurance  Argo Group

Very good diversification

The 3 months correlation between Selective and Argo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Argo Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Group International 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 Argo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Group International has no effect on the direction of Selective Insurance i.e., Selective Insurance and Argo Group go up and down completely randomly.

Pair Corralation between Selective Insurance and Argo Group

Given the investment horizon of 90 days Selective Insurance Group is expected to generate 13.1 times more return on investment than Argo Group. However, Selective Insurance is 13.1 times more volatile than Argo Group International. It trades about 0.05 of its potential returns per unit of risk. Argo Group International is currently generating about 0.41 per unit of risk. If you would invest  8,719  in Selective Insurance Group on April 25, 2025 and sell it today you would earn a total of  322.00  from holding Selective Insurance Group or generate 3.69% return on investment over 90 days.

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

Selective Insurance Group  vs.  Argo Group International

Selective Insurance

Risk-Adjusted Performance

Weak

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 fairly strong technical and fundamental indicators, Selective Insurance is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Argo Group International

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Argo Group International are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Argo Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Selective Insurance and Argo Group

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

The idea behind Selective Insurance Group and Argo Group International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.