Correlation Between Insurance Australia and Recce
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Recce 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 Recce 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 Recce, you can compare the effects of market volatilities on Insurance Australia and Recce 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 Recce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Recce.
Diversification Opportunities for Insurance Australia and Recce
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and Recce is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Recce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recce 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 Recce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recce has no effect on the direction of Insurance Australia i.e., Insurance Australia and Recce go up and down completely randomly.
Pair Corralation between Insurance Australia and Recce
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 0.52 times more return on investment than Recce. However, Insurance Australia Group is 1.92 times less risky than Recce. It trades about 0.4 of its potential returns per unit of risk. Recce is currently generating about -0.09 per unit of risk. If you would invest 750.00 in Insurance Australia Group on September 1, 2024 and sell it today you would earn a total of 103.00 from holding Insurance Australia Group or generate 13.73% 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. Recce
Performance |
| Timeline |
| Insurance Australia |
| Recce |
Insurance Australia and Recce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Recce
The main advantage of trading using opposite Insurance Australia and Recce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Recce 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 Recce will offset losses from the drop in Recce's long position.| Insurance Australia vs. Macquarie Bank Limited | Insurance Australia vs. Computershare | Insurance Australia vs. Ras Technology Holdings | Insurance Australia vs. Kkr Credit Income |
| Recce vs. Macquarie Technology Group | Recce vs. Truscott Mining Corp | Recce vs. Hansen Technologies | Recce vs. Computershare |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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