Correlation Between Insurance Australia and Event Hospitality
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Event Hospitality 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 Event Hospitality 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 Event Hospitality and, you can compare the effects of market volatilities on Insurance Australia and Event Hospitality 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 Event Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Event Hospitality.
Diversification Opportunities for Insurance Australia and Event Hospitality
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insurance and Event is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Event Hospitality and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Event Hospitality 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 Event Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Event Hospitality has no effect on the direction of Insurance Australia i.e., Insurance Australia and Event Hospitality go up and down completely randomly.
Pair Corralation between Insurance Australia and Event Hospitality
Assuming the 90 days trading horizon Insurance Australia is expected to generate 1.26 times less return on investment than Event Hospitality. In addition to that, Insurance Australia is 1.06 times more volatile than Event Hospitality and. It trades about 0.1 of its total potential returns per unit of risk. Event Hospitality and is currently generating about 0.13 per unit of volatility. If you would invest 1,136 in Event Hospitality and on October 24, 2024 and sell it today you would earn a total of 29.00 from holding Event Hospitality and or generate 2.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Event Hospitality and
Performance |
| Timeline |
| Insurance Australia |
| Event Hospitality |
Insurance Australia and Event Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Event Hospitality
The main advantage of trading using opposite Insurance Australia and Event Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Event Hospitality 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 Event Hospitality will offset losses from the drop in Event Hospitality's long position.| Insurance Australia vs. Black Rock Mining | Insurance Australia vs. Dexus Convenience Retail | Insurance Australia vs. Cleanaway Waste Management | Insurance Australia vs. Sayona Mining |
| Event Hospitality vs. DY6 Metals | Event Hospitality vs. Sequoia Financial Group | Event Hospitality vs. Insurance Australia Group | Event Hospitality vs. Sky Metals |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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