Correlation Between Selective Insurance and SmileDirectClub

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

Diversification Opportunities for Selective Insurance and SmileDirectClub

0.0

Correlation Coefficient

Selective Insurance  SmileDirectClub

Pay attention - limited upside

The 3 months correlation between Selective and SmileDirectClub is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and SmileDirectClub in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmileDirectClub 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 SmileDirectClub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmileDirectClub has no effect on the direction of Selective Insurance i.e., Selective Insurance and SmileDirectClub go up and down completely randomly.

Pair Corralation between Selective Insurance and SmileDirectClub

If you would invest  8,793  in Selective Insurance Group on April 24, 2025 and sell it today you would earn a total of  298.00  from holding Selective Insurance Group or generate 3.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Selective Insurance Group  vs.  SmileDirectClub

Selective Insurance

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Selective Insurance Group are ranked lower than 2 (%) 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.

SmileDirectClub

Risk-Adjusted Performance

Very Weak

Over the last 90 days SmileDirectClub has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, SmileDirectClub is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Selective Insurance and SmileDirectClub

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

The idea behind Selective Insurance Group and SmileDirectClub 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.