Correlation Between Safety Insurance and RLI Corp
Can any of the company-specific risk be diversified away by investing in both Safety Insurance and RLI Corp 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 Safety Insurance and RLI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safety Insurance Group and RLI Corp, you can compare the effects of market volatilities on Safety Insurance and RLI Corp 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 Safety Insurance with a short position of RLI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safety Insurance and RLI Corp.
Diversification Opportunities for Safety Insurance and RLI Corp
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Safety and RLI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Safety Insurance Group and RLI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLI Corp and Safety 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 Safety Insurance Group are associated (or correlated) with RLI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLI Corp has no effect on the direction of Safety Insurance i.e., Safety Insurance and RLI Corp go up and down completely randomly.
Pair Corralation between Safety Insurance and RLI Corp
Given the investment horizon of 90 days Safety Insurance Group is expected to generate 1.18 times more return on investment than RLI Corp. However, Safety Insurance is 1.18 times more volatile than RLI Corp. It trades about -0.09 of its potential returns per unit of risk. RLI Corp is currently generating about -0.14 per unit of risk. If you would invest 7,831 in Safety Insurance Group on June 9, 2025 and sell it today you would lose (573.00) from holding Safety Insurance Group or give up 7.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safety Insurance Group vs. RLI Corp
Performance |
| Timeline |
| Safety Insurance |
| RLI Corp |
Safety Insurance and RLI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safety Insurance and RLI Corp
The main advantage of trading using opposite Safety Insurance and RLI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Insurance position performs unexpectedly, RLI Corp 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 RLI Corp will offset losses from the drop in RLI Corp's long position.| Safety Insurance vs. Horace Mann Educators | Safety Insurance vs. Selective Insurance Group | Safety Insurance vs. CNA Financial | Safety Insurance vs. Kemper |
| RLI Corp vs. Selective Insurance Group | RLI Corp vs. Horace Mann Educators | RLI Corp vs. Kemper | RLI Corp vs. ProAssurance |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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