Correlation Between Insurance Australia and K2 Asset
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and K2 Asset 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 K2 Asset 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 K2 Asset Management, you can compare the effects of market volatilities on Insurance Australia and K2 Asset 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 K2 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and K2 Asset.
Diversification Opportunities for Insurance Australia and K2 Asset
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Insurance and KAM is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and K2 Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Asset Management 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 K2 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Asset Management has no effect on the direction of Insurance Australia i.e., Insurance Australia and K2 Asset go up and down completely randomly.
Pair Corralation between Insurance Australia and K2 Asset
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 0.67 times more return on investment than K2 Asset. However, Insurance Australia Group is 1.49 times less risky than K2 Asset. It trades about 0.14 of its potential returns per unit of risk. K2 Asset Management is currently generating about -0.22 per unit of risk. If you would invest 857.00 in Insurance Australia Group on October 30, 2024 and sell it today you would earn a total of 25.00 from holding Insurance Australia Group or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. K2 Asset Management
Performance |
| Timeline |
| Insurance Australia |
| K2 Asset Management |
Insurance Australia and K2 Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and K2 Asset
The main advantage of trading using opposite Insurance Australia and K2 Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, K2 Asset 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 K2 Asset will offset losses from the drop in K2 Asset's long position.| Insurance Australia vs. Healthco Healthcare and | Insurance Australia vs. Insignia Financial | Insurance Australia vs. Macquarie Bank Limited | Insurance Australia vs. Oneview Healthcare PLC |
| K2 Asset vs. MFF Capital Investments | K2 Asset vs. Alternative Investment Trust | K2 Asset vs. Macquarie Bank Limited | K2 Asset vs. Qbe Insurance 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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