Correlation Between Auswide Bank and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Auswide Bank 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 Auswide Bank and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auswide Bank and Insurance Australia Group, you can compare the effects of market volatilities on Auswide Bank 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 Auswide Bank with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auswide Bank and Insurance Australia.
Diversification Opportunities for Auswide Bank and Insurance Australia
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auswide and Insurance is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Auswide Bank and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Auswide Bank 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 Auswide Bank 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 Auswide Bank i.e., Auswide Bank and Insurance Australia go up and down completely randomly.
Pair Corralation between Auswide Bank and Insurance Australia
Assuming the 90 days trading horizon Auswide Bank is expected to under-perform the Insurance Australia. In addition to that, Auswide Bank is 1.11 times more volatile than Insurance Australia Group. It trades about -0.01 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.1 per unit of volatility. If you would invest 471.00 in Insurance Australia Group on October 16, 2024 and sell it today you would earn a total of 374.00 from holding Insurance Australia Group or generate 79.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auswide Bank vs. Insurance Australia Group
Performance |
| Timeline |
| Auswide Bank |
| Insurance Australia |
Auswide Bank and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auswide Bank and Insurance Australia
The main advantage of trading using opposite Auswide Bank and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auswide Bank 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.| Auswide Bank vs. Austco Healthcare | Auswide Bank vs. Falcon Metals | Auswide Bank vs. Epsilon Healthcare | Auswide Bank vs. Global Health |
| Insurance Australia vs. Queste Communications | Insurance Australia vs. Liberty Financial Group | Insurance Australia vs. Credit Clear | Insurance Australia vs. Auswide Bank |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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