Correlation Between Black Rock and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Black Rock 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 Black Rock and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Insurance Australia Group, you can compare the effects of market volatilities on Black Rock 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 Black Rock with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Insurance Australia.
Diversification Opportunities for Black Rock and Insurance Australia
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Black and Insurance is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Black Rock 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 Black Rock Mining 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 Black Rock i.e., Black Rock and Insurance Australia go up and down completely randomly.
Pair Corralation between Black Rock and Insurance Australia
Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Insurance Australia. In addition to that, Black Rock is 3.77 times more volatile than Insurance Australia Group. It trades about -0.03 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.11 per unit of volatility. If you would invest 443.00 in Insurance Australia Group on September 2, 2024 and sell it today you would earn a total of 410.00 from holding Insurance Australia Group or generate 92.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Rock Mining vs. Insurance Australia Group
Performance |
| Timeline |
| Black Rock Mining |
| Insurance Australia |
Black Rock and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Rock and Insurance Australia
The main advantage of trading using opposite Black Rock and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock 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.| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Sandfire Resources NL |
| Insurance Australia vs. Perpetual Credit Income | Insurance Australia vs. Bank of Queensland | Insurance Australia vs. Wt Financial Group | Insurance Australia vs. Qbe Insurance Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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