Correlation Between ACDC Metals and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both ACDC Metals 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 ACDC Metals and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ACDC Metals and Insurance Australia Group, you can compare the effects of market volatilities on ACDC Metals 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 ACDC Metals with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACDC Metals and Insurance Australia.
Diversification Opportunities for ACDC Metals and Insurance Australia
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ACDC and Insurance is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ACDC Metals and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and ACDC Metals 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 ACDC Metals 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 ACDC Metals i.e., ACDC Metals and Insurance Australia go up and down completely randomly.
Pair Corralation between ACDC Metals and Insurance Australia
Assuming the 90 days trading horizon ACDC Metals is expected to under-perform the Insurance Australia. In addition to that, ACDC Metals is 3.59 times more volatile than Insurance Australia Group. It trades about 0.0 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.13 per unit of volatility. If you would invest 625.00 in Insurance Australia Group on October 12, 2024 and sell it today you would earn a total of 232.00 from holding Insurance Australia Group or generate 37.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ACDC Metals vs. Insurance Australia Group
Performance |
| Timeline |
| ACDC Metals |
| Insurance Australia |
ACDC Metals and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ACDC Metals and Insurance Australia
The main advantage of trading using opposite ACDC Metals and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACDC Metals 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.| ACDC Metals vs. COG Financial Services | ACDC Metals vs. Perpetual Credit Income | ACDC Metals vs. Liberty Financial Group | ACDC Metals vs. Dexus Convenience Retail |
| Insurance Australia vs. Bluescope Steel | Insurance Australia vs. Champion Iron | Insurance Australia vs. Tombador Iron | Insurance Australia vs. National Storage REIT |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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