Correlation Between Science Applications and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Insurance Australia Group, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Insurance Australia.
Diversification Opportunities for Science Applications and Insurance Australia
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Science and Insurance is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Insurance Australia go up and down completely randomly.
Pair Corralation between Science Applications and Insurance Australia
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Insurance Australia. In addition to that, Science Applications is 1.74 times more volatile than Insurance Australia Group. It trades about -0.12 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.22 per unit of volatility. If you would invest 450.00 in Insurance Australia Group on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Insurance Australia Group or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Science Applications Internati vs. Insurance Australia Group
Performance |
| Timeline |
| Science Applications |
| Insurance Australia |
Science Applications and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Insurance Australia
The main advantage of trading using opposite Science Applications and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. PKSHA TECHNOLOGY INC | Science Applications vs. Amkor Technology | Science Applications vs. ULTRA CLEAN HLDGS | Science Applications vs. Goosehead Insurance |
| Insurance Australia vs. PICC Property and | Insurance Australia vs. QBE Insurance Group | Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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