Correlation Between Insurance Australia and X2M Connect
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and X2M Connect 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 X2M Connect 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 X2M Connect, you can compare the effects of market volatilities on Insurance Australia and X2M Connect 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 X2M Connect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and X2M Connect.
Diversification Opportunities for Insurance Australia and X2M Connect
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insurance and X2M is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and X2M Connect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X2M Connect 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 X2M Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X2M Connect has no effect on the direction of Insurance Australia i.e., Insurance Australia and X2M Connect go up and down completely randomly.
Pair Corralation between Insurance Australia and X2M Connect
Assuming the 90 days trading horizon Insurance Australia Group is expected to generate 0.39 times more return on investment than X2M Connect. However, Insurance Australia Group is 2.57 times less risky than X2M Connect. It trades about 0.2 of its potential returns per unit of risk. X2M Connect is currently generating about -0.04 per unit of risk. If you would invest 617.00 in Insurance Australia Group on August 30, 2024 and sell it today you would earn a total of 230.00 from holding Insurance Australia Group or generate 37.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.66% |
| Values | Daily Returns |
Insurance Australia Group vs. X2M Connect
Performance |
| Timeline |
| Insurance Australia |
| X2M Connect |
Insurance Australia and X2M Connect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and X2M Connect
The main advantage of trading using opposite Insurance Australia and X2M Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, X2M Connect 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 X2M Connect will offset losses from the drop in X2M Connect's long position.| Insurance Australia vs. PVW Resources | Insurance Australia vs. Woolworths | Insurance Australia vs. Wesfarmers | Insurance Australia vs. Coles Group |
| X2M Connect vs. Hudson Investment Group | X2M Connect vs. Garda Diversified Ppty | X2M Connect vs. Advanced Braking Technology | X2M Connect 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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