Correlation Between Insurance Australia and Santana Minerals
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Santana Minerals 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 Santana Minerals 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 Santana Minerals, you can compare the effects of market volatilities on Insurance Australia and Santana Minerals 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 Santana Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Santana Minerals.
Diversification Opportunities for Insurance Australia and Santana Minerals
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Insurance and Santana is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Santana Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Santana Minerals 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 Santana Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Santana Minerals has no effect on the direction of Insurance Australia i.e., Insurance Australia and Santana Minerals go up and down completely randomly.
Pair Corralation between Insurance Australia and Santana Minerals
Assuming the 90 days trading horizon Insurance Australia is expected to generate 1.54 times less return on investment than Santana Minerals. But when comparing it to its historical volatility, Insurance Australia Group is 3.38 times less risky than Santana Minerals. It trades about 0.16 of its potential returns per unit of risk. Santana Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 34.00 in Santana Minerals on September 25, 2024 and sell it today you would earn a total of 12.00 from holding Santana Minerals or generate 35.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Santana Minerals
Performance |
| Timeline |
| Insurance Australia |
| Santana Minerals |
Insurance Australia and Santana Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Santana Minerals
The main advantage of trading using opposite Insurance Australia and Santana Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Santana Minerals 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 Santana Minerals will offset losses from the drop in Santana Minerals' long position.| Insurance Australia vs. PVW Resources | Insurance Australia vs. Woolworths | Insurance Australia vs. Wesfarmers | Insurance Australia vs. Coles Group |
| Santana Minerals vs. Northern Star Resources | Santana Minerals vs. Evolution Mining | Santana Minerals vs. Bluescope Steel | Santana Minerals vs. Aneka Tambang Tbk |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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