Correlation Between Stewart Information and Selective Insurance

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

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

Diversification Opportunities for Stewart Information and Selective Insurance

0.29

Correlation Coefficient

Stewart Information  Selective Insurance

Modest diversification

The 3 months correlation between Stewart and Selective is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Stewart Information Services and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Stewart Information 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 Stewart Information Services 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 Stewart Information i.e., Stewart Information and Selective Insurance go up and down completely randomly.

Pair Corralation between Stewart Information and Selective Insurance

Considering the 90-day investment horizon Stewart Information is expected to generate 1.36 times less return on investment than Selective Insurance. In addition to that, Stewart Information is 1.0 times more volatile than Selective Insurance Group. It trades about 0.05 of its total potential returns per unit of risk. Selective Insurance Group is currently generating about 0.06 per unit of volatility. If you would invest  8,239  in Selective Insurance Group on February 3, 2025 and sell it today you would earn a total of  529.00  from holding Selective Insurance Group or generate 6.42% return on investment over 90 days.

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

Stewart Information Services  vs.  Selective Insurance Group

Stewart Information

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Stewart Information Services are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Stewart Information is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Selective Insurance

Risk-Adjusted Performance

Insignificant

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 weak technical and fundamental indicators, Selective Insurance may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Stewart Information and Selective Insurance

The main advantage of trading using opposite Stewart Information and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stewart Information 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 Stewart Information Services 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.