Correlation Between DFS Furniture and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Insurance Australia Group, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Insurance Australia.
Diversification Opportunities for DFS Furniture and Insurance Australia
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DFS and Insurance is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and Insurance Australia go up and down completely randomly.
Pair Corralation between DFS Furniture and Insurance Australia
Assuming the 90 days trading horizon DFS Furniture PLC is expected to under-perform the Insurance Australia. In addition to that, DFS Furniture is 1.23 times more volatile than Insurance Australia Group. It trades about -0.01 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.12 per unit of volatility. If you would invest 454.00 in Insurance Australia Group on October 14, 2024 and sell it today you would earn a total of 56.00 from holding Insurance Australia Group or generate 12.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Insurance Australia Group
Performance |
| Timeline |
| DFS Furniture PLC |
| Insurance Australia |
DFS Furniture and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Insurance Australia
The main advantage of trading using opposite DFS Furniture and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. OFFICE DEPOT | DFS Furniture vs. ORMAT TECHNOLOGIES | DFS Furniture vs. ACCSYS TECHPLC EO | DFS Furniture vs. alstria office REIT AG |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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