Correlation Between Insurance Australia and Odyssey Energy
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Odyssey Energy 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 Odyssey Energy 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 Odyssey Energy, you can compare the effects of market volatilities on Insurance Australia and Odyssey Energy 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 Odyssey Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Odyssey Energy.
Diversification Opportunities for Insurance Australia and Odyssey Energy
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and Odyssey is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Odyssey Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odyssey Energy 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 Odyssey Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odyssey Energy has no effect on the direction of Insurance Australia i.e., Insurance Australia and Odyssey Energy go up and down completely randomly.
Pair Corralation between Insurance Australia and Odyssey Energy
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 0.18 times more return on investment than Odyssey Energy. However, Insurance Australia Group is 5.53 times less risky than Odyssey Energy. It trades about 0.12 of its potential returns per unit of risk. Odyssey Energy is currently generating about 0.02 per unit of risk. If you would invest 561.00 in Insurance Australia Group on August 29, 2024 and sell it today you would earn a total of 245.00 from holding Insurance Australia Group or generate 43.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Odyssey Energy
Performance |
| Timeline |
| Insurance Australia |
| Odyssey Energy |
Insurance Australia and Odyssey Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Odyssey Energy
The main advantage of trading using opposite Insurance Australia and Odyssey Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Odyssey Energy 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 Odyssey Energy will offset losses from the drop in Odyssey Energy's long position.| Insurance Australia vs. Aneka Tambang Tbk | Insurance Australia vs. Woolworths | Insurance Australia vs. Commonwealth Bank | Insurance Australia vs. BHP Group Limited |
| Odyssey Energy vs. Westpac Banking | Odyssey Energy vs. ABACUS STORAGE KING | Odyssey Energy vs. People Infrastructure | Odyssey Energy 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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