Correlation Between Insurance Australia and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Treasury Wine 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 Treasury Wine 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 Treasury Wine Estates, you can compare the effects of market volatilities on Insurance Australia and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Treasury Wine.
Diversification Opportunities for Insurance Australia and Treasury Wine
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insurance and Treasury is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of Insurance Australia i.e., Insurance Australia and Treasury Wine go up and down completely randomly.
Pair Corralation between Insurance Australia and Treasury Wine
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 0.77 times more return on investment than Treasury Wine. However, Insurance Australia Group is 1.3 times less risky than Treasury Wine. It trades about 0.14 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.01 per unit of risk. If you would invest 606.00 in Insurance Australia Group on August 27, 2024 and sell it today you would earn a total of 216.00 from holding Insurance Australia Group or generate 35.64% 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. Treasury Wine Estates
Performance |
| Timeline |
| Insurance Australia |
| Treasury Wine Estates |
Insurance Australia and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Treasury Wine
The main advantage of trading using opposite Insurance Australia and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| Insurance Australia vs. Alternative Investment Trust | Insurance Australia vs. Collins Foods | Insurance Australia vs. Platinum Asia Investments | Insurance Australia vs. Hotel Property Investments |
| Treasury Wine vs. Carlton Investments | Treasury Wine vs. Computershare | Treasury Wine vs. Hudson Investment Group | Treasury Wine vs. A1 Investments Resources |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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