Correlation Between Indutrade and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Indutrade 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 Indutrade and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indutrade AB and Insurance Australia Group, you can compare the effects of market volatilities on Indutrade 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 Indutrade with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indutrade and Insurance Australia.
Diversification Opportunities for Indutrade and Insurance Australia
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Indutrade and Insurance is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Indutrade AB and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Indutrade 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 Indutrade AB 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 Indutrade i.e., Indutrade and Insurance Australia go up and down completely randomly.
Pair Corralation between Indutrade and Insurance Australia
Assuming the 90 days horizon Indutrade is expected to generate 1.14 times less return on investment than Insurance Australia. In addition to that, Indutrade is 1.26 times more volatile than Insurance Australia Group. It trades about 0.06 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.09 per unit of volatility. If you would invest 277.00 in Insurance Australia Group on November 9, 2024 and sell it today you would earn a total of 243.00 from holding Insurance Australia Group or generate 87.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indutrade AB vs. Insurance Australia Group
Performance |
| Timeline |
| Indutrade AB |
| Insurance Australia |
Indutrade and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indutrade and Insurance Australia
The main advantage of trading using opposite Indutrade and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indutrade 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.| Indutrade vs. Rocket Internet SE | Indutrade vs. Perseus Mining Limited | Indutrade vs. INTERNET INJPADR 1 | Indutrade vs. Highlight Communications AG |
| Insurance Australia vs. ALBIS LEASING AG | Insurance Australia vs. ADRIATIC METALS LS 013355 | Insurance Australia vs. FIREWEED METALS P | Insurance Australia vs. Jacquet Metal Service |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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