Correlation Between Spirent Communications and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both Spirent Communications and INSURANCE AUST 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 Spirent Communications and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and INSURANCE AUST GRP, you can compare the effects of market volatilities on Spirent Communications and INSURANCE AUST 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 Spirent Communications with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and INSURANCE AUST.
Diversification Opportunities for Spirent Communications and INSURANCE AUST
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spirent and INSURANCE is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP and Spirent Communications 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 Spirent Communications plc are associated (or correlated) with INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of Spirent Communications i.e., Spirent Communications and INSURANCE AUST go up and down completely randomly.
Pair Corralation between Spirent Communications and INSURANCE AUST
Assuming the 90 days horizon Spirent Communications is expected to generate 2.57 times less return on investment than INSURANCE AUST. In addition to that, Spirent Communications is 2.7 times more volatile than INSURANCE AUST GRP. It trades about 0.01 of its total potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.09 per unit of volatility. If you would invest 270.00 in INSURANCE AUST GRP on October 25, 2024 and sell it today you would earn a total of 255.00 from holding INSURANCE AUST GRP or generate 94.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. INSURANCE AUST GRP
Performance |
| Timeline |
| Spirent Communications |
| INSURANCE AUST GRP |
Spirent Communications and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and INSURANCE AUST
The main advantage of trading using opposite Spirent Communications and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications position performs unexpectedly, INSURANCE AUST 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 AUST will offset losses from the drop in INSURANCE AUST's long position.| Spirent Communications vs. Easy Software AG | Spirent Communications vs. SCOTT TECHNOLOGY | Spirent Communications vs. Summit Hotel Properties | Spirent Communications vs. Wyndham Hotels Resorts |
| INSURANCE AUST vs. Teradata Corp | INSURANCE AUST vs. Retail Estates NV | INSURANCE AUST vs. CN DATANG C | INSURANCE AUST vs. SILVER BULLET DATA |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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