Correlation Between Insurance Australia and Steamships Trading
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Steamships Trading 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 Steamships Trading 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 Steamships Trading, you can compare the effects of market volatilities on Insurance Australia and Steamships Trading 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 Steamships Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Steamships Trading.
Diversification Opportunities for Insurance Australia and Steamships Trading
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Insurance and Steamships is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Steamships Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steamships Trading 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 Steamships Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steamships Trading has no effect on the direction of Insurance Australia i.e., Insurance Australia and Steamships Trading go up and down completely randomly.
Pair Corralation between Insurance Australia and Steamships Trading
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 5.57 times more return on investment than Steamships Trading. However, Insurance Australia is 5.57 times more volatile than Steamships Trading. It trades about 0.16 of its potential returns per unit of risk. Steamships Trading is currently generating about -0.17 per unit of risk. If you would invest 755.00 in Insurance Australia Group on October 14, 2024 and sell it today you would earn a total of 101.00 from holding Insurance Australia Group or generate 13.38% 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. Steamships Trading
Performance |
| Timeline |
| Insurance Australia |
| Steamships Trading |
Insurance Australia and Steamships Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Steamships Trading
The main advantage of trading using opposite Insurance Australia and Steamships Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Steamships Trading 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 Steamships Trading will offset losses from the drop in Steamships Trading's long position.| Insurance Australia vs. Truscott Mining Corp | Insurance Australia vs. ACDC Metals | Insurance Australia vs. Aurelia Metals | Insurance Australia vs. Black Rock Mining |
| Steamships Trading vs. DMC Mining | Steamships Trading vs. M3 Mining | Steamships Trading vs. Insurance Australia Group | Steamships Trading vs. Talisman Mining |
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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