Correlation Between Group 6 and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Group 6 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 Group 6 and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 6 Metals and Insurance Australia Group, you can compare the effects of market volatilities on Group 6 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 Group 6 with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 6 and Insurance Australia.
Diversification Opportunities for Group 6 and Insurance Australia
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Group and Insurance is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Group 6 Metals and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Group 6 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 Group 6 Metals 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 Group 6 i.e., Group 6 and Insurance Australia go up and down completely randomly.
Pair Corralation between Group 6 and Insurance Australia
Assuming the 90 days trading horizon Group 6 Metals is expected to under-perform the Insurance Australia. In addition to that, Group 6 is 4.91 times more volatile than Insurance Australia Group. It trades about -0.04 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.13 per unit of volatility. If you would invest 569.00 in Insurance Australia Group on September 4, 2024 and sell it today you would earn a total of 282.00 from holding Insurance Australia Group or generate 49.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Group 6 Metals vs. Insurance Australia Group
Performance |
| Timeline |
| Group 6 Metals |
| Insurance Australia |
Group 6 and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 6 and Insurance Australia
The main advantage of trading using opposite Group 6 and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 6 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.| Group 6 vs. Northern Star Resources | Group 6 vs. Evolution Mining | Group 6 vs. Bluescope Steel | Group 6 vs. Sandfire Resources NL |
| Insurance Australia vs. Aneka Tambang Tbk | Insurance Australia vs. Commonwealth Bank | Insurance Australia vs. Commonwealth Bank of | Insurance Australia vs. Australia and New |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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