Correlation Between REVO INSURANCE and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and Insurance Australia Group, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and Insurance Australia.
Diversification Opportunities for REVO INSURANCE and Insurance Australia
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between REVO and Insurance is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and Insurance Australia go up and down completely randomly.
Pair Corralation between REVO INSURANCE and Insurance Australia
Assuming the 90 days horizon REVO INSURANCE SPA is expected to generate 0.66 times more return on investment than Insurance Australia. However, REVO INSURANCE SPA is 1.52 times less risky than Insurance Australia. It trades about 0.28 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.16 per unit of risk. If you would invest 904.00 in REVO INSURANCE SPA on August 29, 2024 and sell it today you would earn a total of 141.00 from holding REVO INSURANCE SPA or generate 15.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. Insurance Australia Group
Performance |
| Timeline |
| REVO INSURANCE SPA |
| Insurance Australia |
REVO INSURANCE and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and Insurance Australia
The main advantage of trading using opposite REVO INSURANCE and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. Xtrackers ShortDAX | REVO INSURANCE vs. Xtrackers LevDAX | REVO INSURANCE vs. Lyxor 1 | REVO INSURANCE vs. Superior Plus Corp |
| Insurance Australia vs. PICC Property and | Insurance Australia vs. QBE Insurance Group | Insurance Australia vs. Superior Plus Corp | 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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