Correlation Between Community Trust and Selective Insurance
Can any of the company-specific risk be diversified away by investing in both Community Trust 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 Community Trust and Selective Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Trust Bancorp and Selective Insurance Group, you can compare the effects of market volatilities on Community Trust 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 Community Trust with a short position of Selective Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Trust and Selective Insurance.
Diversification Opportunities for Community Trust and Selective Insurance
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Community and Selective is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Community Trust Bancorp and Selective Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selective Insurance and Community Trust 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 Community Trust Bancorp 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 Community Trust i.e., Community Trust and Selective Insurance go up and down completely randomly.
Pair Corralation between Community Trust and Selective Insurance
Given the investment horizon of 90 days Community Trust Bancorp is expected to generate 0.59 times more return on investment than Selective Insurance. However, Community Trust Bancorp is 1.71 times less risky than Selective Insurance. It trades about 0.14 of its potential returns per unit of risk. Selective Insurance Group is currently generating about -0.04 per unit of risk. If you would invest 5,141 in Community Trust Bancorp on June 6, 2025 and sell it today you would earn a total of 681.00 from holding Community Trust Bancorp or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Trust Bancorp vs. Selective Insurance Group
Performance |
| Timeline |
| Community Trust Bancorp |
| Selective Insurance |
Community Trust and Selective Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Trust and Selective Insurance
The main advantage of trading using opposite Community Trust and Selective Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Trust 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.| Community Trust vs. Arrow Financial | Community Trust vs. BancFirst | Community Trust vs. City Holding | Community Trust vs. Great Southern Bancorp |
| Selective Insurance vs. Horace Mann Educators | Selective Insurance vs. Kemper | Selective Insurance vs. RLI Corp | Selective Insurance vs. Global Indemnity PLC |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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