Correlation Between Insurance Australia and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and ACDC Metals 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 Insurance Australia and ACDC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and ACDC Metals, you can compare the effects of market volatilities on Insurance Australia and ACDC Metals 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 Insurance Australia with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and ACDC Metals.
Diversification Opportunities for Insurance Australia and ACDC Metals
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and ACDC is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Insurance Australia 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 Insurance Australia Group are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Insurance Australia i.e., Insurance Australia and ACDC Metals go up and down completely randomly.
Pair Corralation between Insurance Australia and ACDC Metals
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 0.28 times more return on investment than ACDC Metals. However, Insurance Australia Group is 3.59 times less risky than ACDC Metals. It trades about 0.13 of its potential returns per unit of risk. ACDC Metals is currently generating about 0.0 per unit of risk. If you would invest 625.00 in Insurance Australia Group on October 12, 2024 and sell it today you would earn a total of 232.00 from holding Insurance Australia Group or generate 37.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. ACDC Metals
Performance |
| Timeline |
| Insurance Australia |
| ACDC Metals |
Insurance Australia and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and ACDC Metals
The main advantage of trading using opposite Insurance Australia and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, ACDC Metals 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Insurance Australia vs. Bluescope Steel | Insurance Australia vs. Champion Iron | Insurance Australia vs. Tombador Iron | Insurance Australia vs. National Storage REIT |
| ACDC Metals vs. COG Financial Services | ACDC Metals vs. Perpetual Credit Income | ACDC Metals vs. Liberty Financial Group | ACDC Metals vs. Dexus Convenience Retail |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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