Correlation Between Australian Unity and Sequoia Financial
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Sequoia Financial 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 Australian Unity and Sequoia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Unity Office and Sequoia Financial Group, you can compare the effects of market volatilities on Australian Unity and Sequoia Financial 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 Australian Unity with a short position of Sequoia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Sequoia Financial.
Diversification Opportunities for Australian Unity and Sequoia Financial
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and Sequoia is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Sequoia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia Financial and Australian Unity 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 Australian Unity Office are associated (or correlated) with Sequoia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Financial has no effect on the direction of Australian Unity i.e., Australian Unity and Sequoia Financial go up and down completely randomly.
Pair Corralation between Australian Unity and Sequoia Financial
Assuming the 90 days trading horizon Australian Unity Office is expected to under-perform the Sequoia Financial. But the stock apears to be less risky and, when comparing its historical volatility, Australian Unity Office is 2.98 times less risky than Sequoia Financial. The stock trades about -0.05 of its potential returns per unit of risk. The Sequoia Financial Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 40.00 in Sequoia Financial Group on November 2, 2024 and sell it today you would earn a total of 3.00 from holding Sequoia Financial Group or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Sequoia Financial Group
Performance |
| Timeline |
| Australian Unity Office |
| Sequoia Financial |
Australian Unity and Sequoia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Sequoia Financial
The main advantage of trading using opposite Australian Unity and Sequoia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Sequoia Financial 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 Sequoia Financial will offset losses from the drop in Sequoia Financial's long position.| Australian Unity vs. Viva Leisure | Australian Unity vs. DY6 Metals | Australian Unity vs. ACDC Metals | Australian Unity vs. COG Financial Services |
| Sequoia Financial vs. Insurance Australia Group | Sequoia Financial vs. Beam Communications Holdings | Sequoia Financial vs. Insignia Financial | Sequoia Financial vs. Microequities Asset Management |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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