Correlation Between Gtn and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Gtn and Insignia Financial 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 Gtn and Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gtn and Insignia Financial, you can compare the effects of market volatilities on Gtn and Insignia Financial 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 Gtn with a short position of Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gtn and Insignia Financial.
Diversification Opportunities for Gtn and Insignia Financial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Gtn and Insignia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Gtn and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial and Gtn 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 Gtn are associated (or correlated) with Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Gtn i.e., Gtn and Insignia Financial go up and down completely randomly.
Pair Corralation between Gtn and Insignia Financial
Assuming the 90 days trading horizon Gtn is expected to generate 1.33 times more return on investment than Insignia Financial. However, Gtn is 1.33 times more volatile than Insignia Financial. It trades about 0.03 of its potential returns per unit of risk. Insignia Financial is currently generating about 0.02 per unit of risk. If you would invest 36.00 in Gtn on August 26, 2024 and sell it today you would earn a total of 8.00 from holding Gtn or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gtn vs. Insignia Financial
Performance |
| Timeline |
| Gtn |
| Insignia Financial |
Gtn and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gtn and Insignia Financial
The main advantage of trading using opposite Gtn and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gtn position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| Gtn vs. Charter Hall Education | Gtn vs. Macquarie Technology Group | Gtn vs. Mach7 Technologies | Gtn vs. Hansen Technologies |
| Insignia Financial vs. National Australia Bank | Insignia Financial vs. National Australia Bank | Insignia Financial vs. Westpac Banking | Insignia Financial vs. National Australia Bank |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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