Correlation Between Insurance Australia and Austco Healthcare
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Austco Healthcare 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 Austco Healthcare 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 Austco Healthcare, you can compare the effects of market volatilities on Insurance Australia and Austco Healthcare 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 Austco Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Austco Healthcare.
Diversification Opportunities for Insurance Australia and Austco Healthcare
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Insurance and Austco is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Austco Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austco Healthcare 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 Austco Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austco Healthcare has no effect on the direction of Insurance Australia i.e., Insurance Australia and Austco Healthcare go up and down completely randomly.
Pair Corralation between Insurance Australia and Austco Healthcare
Assuming the 90 days trading horizon Insurance Australia is expected to generate 2.0 times less return on investment than Austco Healthcare. But when comparing it to its historical volatility, Insurance Australia Group is 2.59 times less risky than Austco Healthcare. It trades about 0.1 of its potential returns per unit of risk. Austco Healthcare is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Austco Healthcare on October 16, 2024 and sell it today you would earn a total of 20.00 from holding Austco Healthcare or generate 166.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Austco Healthcare
Performance |
| Timeline |
| Insurance Australia |
| Austco Healthcare |
Insurance Australia and Austco Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Austco Healthcare
The main advantage of trading using opposite Insurance Australia and Austco Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Austco Healthcare 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 Austco Healthcare will offset losses from the drop in Austco Healthcare's long position.| Insurance Australia vs. Queste Communications | Insurance Australia vs. Liberty Financial Group | Insurance Australia vs. Credit Clear | Insurance Australia vs. Auswide Bank |
| Austco Healthcare vs. Evolution Mining | Austco Healthcare vs. Pure Foods Tasmania | Austco Healthcare vs. Black Rock Mining | Austco Healthcare vs. Insurance Australia Group |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |