Correlation Between Insurance Australia and Objective Corp
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Objective Corp 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 Objective Corp 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 Objective Corp, you can compare the effects of market volatilities on Insurance Australia and Objective Corp 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 Objective Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Objective Corp.
Diversification Opportunities for Insurance Australia and Objective Corp
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Insurance and Objective is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Objective Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Objective Corp 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 Objective Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Objective Corp has no effect on the direction of Insurance Australia i.e., Insurance Australia and Objective Corp go up and down completely randomly.
Pair Corralation between Insurance Australia and Objective Corp
Assuming the 90 days trading horizon Insurance Australia is expected to generate 1.15 times less return on investment than Objective Corp. But when comparing it to its historical volatility, Insurance Australia Group is 1.41 times less risky than Objective Corp. It trades about 0.2 of its potential returns per unit of risk. Objective Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,217 in Objective Corp on August 31, 2024 and sell it today you would earn a total of 531.00 from holding Objective Corp or generate 43.63% 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. Objective Corp
Performance |
| Timeline |
| Insurance Australia |
| Objective Corp |
Insurance Australia and Objective Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Objective Corp
The main advantage of trading using opposite Insurance Australia and Objective Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Objective Corp 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 Objective Corp will offset losses from the drop in Objective Corp's long position.| Insurance Australia vs. Black Rock Mining | Insurance Australia vs. Healthco Healthcare and | Insurance Australia vs. Stelar Metals | Insurance Australia vs. Regis Healthcare |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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