Correlation Between WIMFARM SA and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both WIMFARM SA 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 WIMFARM SA and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WIMFARM SA EO and Insurance Australia Group, you can compare the effects of market volatilities on WIMFARM SA 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 WIMFARM SA with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of WIMFARM SA and Insurance Australia.
Diversification Opportunities for WIMFARM SA and Insurance Australia
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between WIMFARM and Insurance is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding WIMFARM SA EO and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and WIMFARM SA 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 WIMFARM SA EO 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 WIMFARM SA i.e., WIMFARM SA and Insurance Australia go up and down completely randomly.
Pair Corralation between WIMFARM SA and Insurance Australia
Assuming the 90 days horizon WIMFARM SA EO is expected to under-perform the Insurance Australia. In addition to that, WIMFARM SA is 2.24 times more volatile than Insurance Australia Group. It trades about -0.06 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.08 per unit of volatility. If you would invest 280.00 in Insurance Australia Group on October 13, 2024 and sell it today you would earn a total of 230.00 from holding Insurance Australia Group or generate 82.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WIMFARM SA EO vs. Insurance Australia Group
Performance |
| Timeline |
| WIMFARM SA EO |
| Insurance Australia |
WIMFARM SA and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WIMFARM SA and Insurance Australia
The main advantage of trading using opposite WIMFARM SA and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WIMFARM SA 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.| WIMFARM SA vs. FORMPIPE SOFTWARE AB | WIMFARM SA vs. ADDUS HOMECARE | WIMFARM SA vs. Kingdee International Software | WIMFARM SA vs. USU Software AG |
| Insurance Australia vs. ALERION CLEANPOWER | Insurance Australia vs. CVW CLEANTECH INC | Insurance Australia vs. Keck Seng Investments | Insurance Australia vs. Zoom Video Communications |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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