Correlation Between Alternative Investment and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Alternative Investment 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 Alternative Investment and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alternative Investment Trust and Insurance Australia Group, you can compare the effects of market volatilities on Alternative Investment 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 Alternative Investment with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alternative Investment and Insurance Australia.
Diversification Opportunities for Alternative Investment and Insurance Australia
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alternative and Insurance is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alternative Investment Trust and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Alternative Investment 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 Alternative Investment Trust 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 Alternative Investment i.e., Alternative Investment and Insurance Australia go up and down completely randomly.
Pair Corralation between Alternative Investment and Insurance Australia
Assuming the 90 days trading horizon Alternative Investment Trust is expected to generate 0.56 times more return on investment than Insurance Australia. However, Alternative Investment Trust is 1.79 times less risky than Insurance Australia. It trades about 0.43 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.07 per unit of risk. If you would invest 144.00 in Alternative Investment Trust on October 22, 2024 and sell it today you would earn a total of 7.00 from holding Alternative Investment Trust or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alternative Investment Trust vs. Insurance Australia Group
Performance |
| Timeline |
| Alternative Investment |
| Insurance Australia |
Alternative Investment and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alternative Investment and Insurance Australia
The main advantage of trading using opposite Alternative Investment and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternative Investment 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.| Alternative Investment vs. Ras Technology Holdings | Alternative Investment vs. Black Rock Mining | Alternative Investment vs. Falcon Metals | Alternative Investment vs. Charter Hall Retail |
| Insurance Australia vs. Aussie Broadband | Insurance Australia vs. WiseTech Global Limited | Insurance Australia vs. Dug Technology | Insurance Australia vs. Ras Technology Holdings |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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