Correlation Between Automotive Stampings and Life Insurance
Can any of the company-specific risk be diversified away by investing in both Automotive Stampings and Life Insurance 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 Automotive Stampings and Life Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automotive Stampings and and Life Insurance, you can compare the effects of market volatilities on Automotive Stampings and Life Insurance 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 Automotive Stampings with a short position of Life Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automotive Stampings and Life Insurance.
Diversification Opportunities for Automotive Stampings and Life Insurance
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Automotive and Life is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Automotive Stampings and and Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Insurance and Automotive Stampings 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 Automotive Stampings and are associated (or correlated) with Life Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Insurance has no effect on the direction of Automotive Stampings i.e., Automotive Stampings and Life Insurance go up and down completely randomly.
Pair Corralation between Automotive Stampings and Life Insurance
Assuming the 90 days trading horizon Automotive Stampings and is expected to under-perform the Life Insurance. In addition to that, Automotive Stampings is 1.4 times more volatile than Life Insurance. It trades about -0.13 of its total potential returns per unit of risk. Life Insurance is currently generating about -0.04 per unit of volatility. If you would invest 99,096 in Life Insurance on September 28, 2024 and sell it today you would lose (9,906) from holding Life Insurance or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automotive Stampings and vs. Life Insurance
Performance |
| Timeline |
| Automotive Stampings and |
| Life Insurance |
Automotive Stampings and Life Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automotive Stampings and Life Insurance
The main advantage of trading using opposite Automotive Stampings and Life Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automotive Stampings position performs unexpectedly, Life Insurance 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 Life Insurance will offset losses from the drop in Life Insurance's long position.| Automotive Stampings vs. Manaksia Coated Metals | Automotive Stampings vs. LLOYDS METALS AND | Automotive Stampings vs. Steelcast Limited | Automotive Stampings vs. Rama Steel Tubes |
| Life Insurance vs. Reliance Industries Limited | Life Insurance vs. Oil Natural Gas | Life Insurance vs. ICICI Bank Limited | Life Insurance vs. Bharti Airtel Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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