Correlation Between Selective Insurance and Allstate

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

Diversification Opportunities for Selective Insurance and Allstate

0.79

Correlation Coefficient

Selective Insurance  Allstate

Poor diversification

The 3 months correlation between Selective and Allstate is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and The Allstate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allstate 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 Allstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allstate has no effect on the direction of Selective Insurance i.e., Selective Insurance and Allstate go up and down completely randomly.

Pair Corralation between Selective Insurance and Allstate

Assuming the 90 days horizon Selective Insurance is expected to generate 1.84 times less return on investment than Allstate. In addition to that, Selective Insurance is 1.12 times more volatile than The Allstate. It trades about 0.09 of its total potential returns per unit of risk. The Allstate is currently generating about 0.18 per unit of volatility. If you would invest  2,042  in The Allstate on May 15, 2025 and sell it today you would earn a total of  141.00  from holding The Allstate or generate 6.9% return on investment over 90 days.

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

Selective Insurance Group  vs.  The Allstate

Selective Insurance

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Selective Insurance Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Selective Insurance is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Allstate

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Allstate are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, Allstate may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Selective Insurance and Allstate

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

The idea behind Selective Insurance Group and The Allstate 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.