Correlation Between Insurance Australia and Eureka Group
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Eureka Group 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 Eureka Group 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 Eureka Group Holdings, you can compare the effects of market volatilities on Insurance Australia and Eureka Group 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 Eureka Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Eureka Group.
Diversification Opportunities for Insurance Australia and Eureka Group
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Insurance and Eureka is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Eureka Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Group Holdings 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 Eureka Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Group Holdings has no effect on the direction of Insurance Australia i.e., Insurance Australia and Eureka Group go up and down completely randomly.
Pair Corralation between Insurance Australia and Eureka Group
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 0.92 times more return on investment than Eureka Group. However, Insurance Australia Group is 1.09 times less risky than Eureka Group. It trades about 0.35 of its potential returns per unit of risk. Eureka Group Holdings is currently generating about -0.27 per unit of risk. If you would invest 755.00 in Insurance Australia Group on August 30, 2024 and sell it today you would earn a total of 92.00 from holding Insurance Australia Group or generate 12.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Insurance Australia Group vs. Eureka Group Holdings
Performance |
| Timeline |
| Insurance Australia |
| Eureka Group Holdings |
Insurance Australia and Eureka Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Eureka Group
The main advantage of trading using opposite Insurance Australia and Eureka Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Eureka Group 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 Eureka Group will offset losses from the drop in Eureka Group's long position.| Insurance Australia vs. PVW Resources | Insurance Australia vs. Woolworths | Insurance Australia vs. Wesfarmers | Insurance Australia vs. Coles Group |
| Eureka Group vs. Scentre Group | Eureka Group vs. Vicinity Centres Re | Eureka Group vs. Charter Hall Retail | Eureka Group vs. Cromwell Property 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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