Correlation Between Computershare and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Computershare 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 Computershare and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Computershare and Insurance Australia Group, you can compare the effects of market volatilities on Computershare 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 Computershare with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Computershare and Insurance Australia.
Diversification Opportunities for Computershare and Insurance Australia
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Computershare and Insurance is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Computershare and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Computershare 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 Computershare 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 Computershare i.e., Computershare and Insurance Australia go up and down completely randomly.
Pair Corralation between Computershare and Insurance Australia
Assuming the 90 days trading horizon Computershare is expected to generate 1.3 times more return on investment than Insurance Australia. However, Computershare is 1.3 times more volatile than Insurance Australia Group. It trades about 0.48 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.4 per unit of risk. If you would invest 2,638 in Computershare on September 1, 2024 and sell it today you would earn a total of 551.00 from holding Computershare or generate 20.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Computershare vs. Insurance Australia Group
Performance |
| Timeline |
| Computershare |
| Insurance Australia |
Computershare and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Computershare and Insurance Australia
The main advantage of trading using opposite Computershare and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computershare 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.| Computershare vs. Aneka Tambang Tbk | Computershare vs. Unibail Rodamco Westfield SE | Computershare vs. Macquarie Group | Computershare vs. Commonwealth Bank |
| Insurance Australia vs. Macquarie Bank Limited | Insurance Australia vs. Computershare | Insurance Australia vs. Ras Technology Holdings | Insurance Australia vs. Kkr Credit Income |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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