Correlation Between Charter Hall and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Insignia 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 Charter Hall and Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Retail and Insignia Financial, you can compare the effects of market volatilities on Charter Hall and Insignia 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 Charter Hall with a short position of Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Insignia Financial.
Diversification Opportunities for Charter Hall and Insignia Financial
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Charter and Insignia is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial and Charter Hall 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 Charter Hall Retail are associated (or correlated) with Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Charter Hall i.e., Charter Hall and Insignia Financial go up and down completely randomly.
Pair Corralation between Charter Hall and Insignia Financial
Assuming the 90 days trading horizon Charter Hall Retail is expected to under-perform the Insignia Financial. But the stock apears to be less risky and, when comparing its historical volatility, Charter Hall Retail is 2.17 times less risky than Insignia Financial. The stock trades about -0.11 of its potential returns per unit of risk. The Insignia Financial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 263.00 in Insignia Financial on August 29, 2024 and sell it today you would earn a total of 48.00 from holding Insignia Financial or generate 18.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Charter Hall Retail vs. Insignia Financial
Performance |
| Timeline |
| Charter Hall Retail |
| Insignia Financial |
Charter Hall and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Insignia Financial
The main advantage of trading using opposite Charter Hall and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Insignia 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| Charter Hall vs. Australian Unity Office | Charter Hall vs. Champion Iron | Charter Hall vs. Ridley | Charter Hall vs. Peel Mining |
| Insignia Financial vs. Champion Iron | Insignia Financial vs. Ridley | Insignia Financial vs. Peel Mining | Insignia Financial vs. Australian Dairy Farms |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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