Correlation Between Admiral Group and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Admiral Group 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 Admiral Group and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group plc and Insurance Australia Group, you can compare the effects of market volatilities on Admiral Group 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 Admiral Group with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and Insurance Australia.
Diversification Opportunities for Admiral Group and Insurance Australia
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Admiral and Insurance is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group 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 Admiral Group 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 Admiral Group 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 Admiral Group i.e., Admiral Group and Insurance Australia go up and down completely randomly.
Pair Corralation between Admiral Group and Insurance Australia
Assuming the 90 days horizon Admiral Group plc is expected to under-perform the Insurance Australia. But the stock apears to be less risky and, when comparing its historical volatility, Admiral Group plc is 1.27 times less risky than Insurance Australia. The stock trades about -0.17 of its potential returns per unit of risk. The Insurance Australia Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 425.00 in Insurance Australia Group on August 28, 2024 and sell it today you would earn a total of 73.00 from holding Insurance Australia Group or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Admiral Group plc vs. Insurance Australia Group
Performance |
| Timeline |
| Admiral Group plc |
| Insurance Australia |
Admiral Group and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Admiral Group and Insurance Australia
The main advantage of trading using opposite Admiral Group and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group 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.| Admiral Group vs. United Utilities Group | Admiral Group vs. AUST AGRICULTURAL | Admiral Group vs. Daito Trust Construction | Admiral Group vs. UNITED UTILITIES GR |
| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. NMI Holdings | Insurance Australia vs. Origin Agritech | Insurance Australia vs. SIVERS SEMICONDUCTORS AB |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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