Correlation Between Star Diamond and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Star Diamond 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 Star Diamond and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Diamond and Insurance Australia Group, you can compare the effects of market volatilities on Star Diamond 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 Star Diamond with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Diamond and Insurance Australia.
Diversification Opportunities for Star Diamond and Insurance Australia
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Star and Insurance is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Star Diamond and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Star Diamond 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 Star Diamond 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 Star Diamond i.e., Star Diamond and Insurance Australia go up and down completely randomly.
Pair Corralation between Star Diamond and Insurance Australia
Assuming the 90 days horizon Star Diamond is expected to generate 4.25 times less return on investment than Insurance Australia. In addition to that, Star Diamond is 5.83 times more volatile than Insurance Australia Group. It trades about 0.0 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.1 per unit of volatility. If you would invest 282.00 in Insurance Australia Group on August 31, 2024 and sell it today you would earn a total of 228.00 from holding Insurance Australia Group or generate 80.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Diamond vs. Insurance Australia Group
Performance |
| Timeline |
| Star Diamond |
| Insurance Australia |
Star Diamond and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Diamond and Insurance Australia
The main advantage of trading using opposite Star Diamond and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Diamond 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.| Star Diamond vs. InterContinental Hotels Group | Star Diamond vs. Virtus Investment Partners | Star Diamond vs. WILLIS LEASE FIN | Star Diamond vs. MELIA HOTELS |
| Insurance Australia vs. BURLINGTON STORES | Insurance Australia vs. DELTA AIR LINES | Insurance Australia vs. Burlington Stores | Insurance Australia vs. SEALED AIR |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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