Correlation Between LIFENET INSURANCE and ARISTOCRAT LEISURE
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE and ARISTOCRAT LEISURE 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 LIFENET INSURANCE and ARISTOCRAT LEISURE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFENET INSURANCE CO and ARISTOCRAT LEISURE, you can compare the effects of market volatilities on LIFENET INSURANCE and ARISTOCRAT LEISURE 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 LIFENET INSURANCE with a short position of ARISTOCRAT LEISURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and ARISTOCRAT LEISURE.
Diversification Opportunities for LIFENET INSURANCE and ARISTOCRAT LEISURE
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFENET and ARISTOCRAT is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and ARISTOCRAT LEISURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARISTOCRAT LEISURE and LIFENET 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 LIFENET INSURANCE CO are associated (or correlated) with ARISTOCRAT LEISURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARISTOCRAT LEISURE has no effect on the direction of LIFENET INSURANCE i.e., LIFENET INSURANCE and ARISTOCRAT LEISURE go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and ARISTOCRAT LEISURE
Assuming the 90 days horizon LIFENET INSURANCE is expected to generate 2.16 times less return on investment than ARISTOCRAT LEISURE. In addition to that, LIFENET INSURANCE is 1.68 times more volatile than ARISTOCRAT LEISURE. It trades about 0.18 of its total potential returns per unit of risk. ARISTOCRAT LEISURE is currently generating about 0.66 per unit of volatility. If you would invest 3,640 in ARISTOCRAT LEISURE on August 28, 2024 and sell it today you would earn a total of 520.00 from holding ARISTOCRAT LEISURE or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. ARISTOCRAT LEISURE
Performance |
| Timeline |
| LIFENET INSURANCE |
| ARISTOCRAT LEISURE |
LIFENET INSURANCE and ARISTOCRAT LEISURE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and ARISTOCRAT LEISURE
The main advantage of trading using opposite LIFENET INSURANCE and ARISTOCRAT LEISURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE position performs unexpectedly, ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE will offset losses from the drop in ARISTOCRAT LEISURE's long position.| LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX | LIFENET INSURANCE vs. Xtrackers LevDAX |
| ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Apple Inc | ARISTOCRAT LEISURE vs. Microsoft |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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