Correlation Between Insurance Australia and Step One
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on Insurance Australia and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Step One.
Diversification Opportunities for Insurance Australia and Step One
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and Step is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Insurance Australia i.e., Insurance Australia and Step One go up and down completely randomly.
Pair Corralation between Insurance Australia and Step One
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 0.46 times more return on investment than Step One. However, Insurance Australia Group is 2.16 times less risky than Step One. It trades about 0.3 of its potential returns per unit of risk. Step One Clothing is currently generating about 0.04 per unit of risk. If you would invest 854.00 in Insurance Australia Group on November 3, 2024 and sell it today you would earn a total of 66.00 from holding Insurance Australia Group or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Step One Clothing
Performance |
| Timeline |
| Insurance Australia |
| Step One Clothing |
Insurance Australia and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Step One
The main advantage of trading using opposite Insurance Australia and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Insurance Australia vs. Microequities Asset Management | Insurance Australia vs. Sports Entertainment Group | Insurance Australia vs. The Environmental Group | Insurance Australia vs. Australian Unity Office |
| Step One vs. Readytech Holdings | Step One vs. Neurotech International | Step One vs. Advanced Braking Technology | Step One vs. K2 Asset Management |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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