Correlation Between H2O Retailing and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and INSURANCE AUST 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 H2O Retailing and INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and INSURANCE AUST GRP, you can compare the effects of market volatilities on H2O Retailing and INSURANCE AUST 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 H2O Retailing with a short position of INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and INSURANCE AUST.
Diversification Opportunities for H2O Retailing and INSURANCE AUST
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between H2O and INSURANCE is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP and H2O Retailing 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 H2O Retailing are associated (or correlated) with INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of H2O Retailing i.e., H2O Retailing and INSURANCE AUST go up and down completely randomly.
Pair Corralation between H2O Retailing and INSURANCE AUST
Assuming the 90 days horizon H2O Retailing is expected to generate 1.89 times more return on investment than INSURANCE AUST. However, H2O Retailing is 1.89 times more volatile than INSURANCE AUST GRP. It trades about 0.08 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.09 per unit of risk. If you would invest 678.00 in H2O Retailing on October 16, 2024 and sell it today you would earn a total of 682.00 from holding H2O Retailing or generate 100.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. INSURANCE AUST GRP
Performance |
| Timeline |
| H2O Retailing |
| INSURANCE AUST GRP |
H2O Retailing and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and INSURANCE AUST
The main advantage of trading using opposite H2O Retailing and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, INSURANCE AUST 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 AUST will offset losses from the drop in INSURANCE AUST's long position.| H2O Retailing vs. GOLD ROAD RES | H2O Retailing vs. Air Transport Services | H2O Retailing vs. Martin Marietta Materials | H2O Retailing vs. SAFEROADS HLDGS |
| INSURANCE AUST vs. H2O Retailing | INSURANCE AUST vs. RETAIL FOOD GROUP | INSURANCE AUST vs. Chuangs China Investments | INSURANCE AUST vs. SEI INVESTMENTS |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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