Correlation Between AGNC INVESTMENT and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both AGNC INVESTMENT and Insurance Australia 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 AGNC INVESTMENT and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGNC INVESTMENT and Insurance Australia Group, you can compare the effects of market volatilities on AGNC INVESTMENT and Insurance Australia 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 AGNC INVESTMENT with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGNC INVESTMENT and Insurance Australia.
Diversification Opportunities for AGNC INVESTMENT and Insurance Australia
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AGNC and Insurance is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding AGNC INVESTMENT and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and AGNC INVESTMENT 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 AGNC INVESTMENT are associated (or correlated) with Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of AGNC INVESTMENT i.e., AGNC INVESTMENT and Insurance Australia go up and down completely randomly.
Pair Corralation between AGNC INVESTMENT and Insurance Australia
Assuming the 90 days trading horizon AGNC INVESTMENT is expected to generate 2.38 times less return on investment than Insurance Australia. But when comparing it to its historical volatility, AGNC INVESTMENT is 2.74 times less risky than Insurance Australia. It trades about 0.13 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 474.00 in Insurance Australia Group on September 15, 2024 and sell it today you would earn a total of 24.00 from holding Insurance Australia Group or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGNC INVESTMENT vs. Insurance Australia Group
Performance |
| Timeline |
| AGNC INVESTMENT |
| Insurance Australia |
AGNC INVESTMENT and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGNC INVESTMENT and Insurance Australia
The main advantage of trading using opposite AGNC INVESTMENT and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGNC INVESTMENT position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| AGNC INVESTMENT vs. PKSHA TECHNOLOGY INC | AGNC INVESTMENT vs. Wayside Technology Group | AGNC INVESTMENT vs. ATOSS SOFTWARE | AGNC INVESTMENT vs. Sunny Optical Technology |
| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB | Insurance Australia vs. CHINA HUARONG ENERHD 50 | Insurance Australia vs. NORDIC HALIBUT AS |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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