Correlation Between Selective Insurance and Treasury Wine

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

Diversification Opportunities for Selective Insurance and Treasury Wine

-0.17

Correlation Coefficient

Selective Insurance  Treasury Wine

Good diversification

The 3 months correlation between Selective and Treasury is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Selective Insurance Group and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Selective Insurance i.e., Selective Insurance and Treasury Wine go up and down completely randomly.

Pair Corralation between Selective Insurance and Treasury Wine

Given the investment horizon of 90 days Selective Insurance Group is expected to generate 2.39 times more return on investment than Treasury Wine. However, Selective Insurance is 2.39 times more volatile than Treasury Wine Estates. It trades about -0.04 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.15 per unit of risk. If you would invest  8,816  in Selective Insurance Group on July 19, 2025 and sell it today you would lose (760.00) from holding Selective Insurance Group or give up 8.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Selective Insurance Group  vs.  Treasury Wine Estates

Selective Insurance

Risk-Adjusted Performance

Weakest

Over the last 90 days Selective Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Treasury Wine Estates

Risk-Adjusted Performance

Weakest

Over the last 90 days Treasury Wine Estates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Selective Insurance and Treasury Wine

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

The idea behind Selective Insurance Group and Treasury Wine Estates 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.