Correlation Between Embark Education and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Embark Education 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 Embark Education and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embark Education Group and Insurance Australia Group, you can compare the effects of market volatilities on Embark Education 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 Embark Education with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Insurance Australia.
Diversification Opportunities for Embark Education and Insurance Australia
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Embark and Insurance is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Embark Education 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 Embark Education Group 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 Embark Education i.e., Embark Education and Insurance Australia go up and down completely randomly.
Pair Corralation between Embark Education and Insurance Australia
Assuming the 90 days trading horizon Embark Education is expected to generate 2.34 times less return on investment than Insurance Australia. In addition to that, Embark Education is 1.55 times more volatile than Insurance Australia Group. It trades about 0.06 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.23 per unit of volatility. If you would invest 754.00 in Insurance Australia Group on August 29, 2024 and sell it today you would earn a total of 52.00 from holding Insurance Australia Group or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embark Education Group vs. Insurance Australia Group
Performance |
| Timeline |
| Embark Education |
| Insurance Australia |
Embark Education and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embark Education and Insurance Australia
The main advantage of trading using opposite Embark Education and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education 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.| Embark Education vs. Summit Resources Limited | Embark Education vs. Champion Iron | Embark Education vs. Ridley | Embark Education vs. Peel Mining |
| Insurance Australia vs. Australian United Investment | Insurance Australia vs. Platinum Asia Investments | Insurance Australia vs. Embark Education Group | Insurance Australia vs. Step One Clothing |
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.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |