Correlation Between International Agricultural and Delta Insurance
Can any of the company-specific risk be diversified away by investing in both International Agricultural and Delta Insurance 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 International Agricultural and Delta Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Agricultural Products and Delta Insurance, you can compare the effects of market volatilities on International Agricultural and Delta Insurance 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 International Agricultural with a short position of Delta Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Agricultural and Delta Insurance.
Diversification Opportunities for International Agricultural and Delta Insurance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between International and Delta is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding International Agricultural Pro and Delta Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Insurance and International Agricultural 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 International Agricultural Products are associated (or correlated) with Delta Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Insurance has no effect on the direction of International Agricultural i.e., International Agricultural and Delta Insurance go up and down completely randomly.
Pair Corralation between International Agricultural and Delta Insurance
Assuming the 90 days trading horizon International Agricultural Products is expected to generate 3.74 times more return on investment than Delta Insurance. However, International Agricultural is 3.74 times more volatile than Delta Insurance. It trades about 0.07 of its potential returns per unit of risk. Delta Insurance is currently generating about 0.01 per unit of risk. If you would invest 768.00 in International Agricultural Products on September 3, 2024 and sell it today you would earn a total of 1,154 from holding International Agricultural Products or generate 150.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Agricultural Pro vs. Delta Insurance
Performance |
| Timeline |
| International Agricultural |
| Delta Insurance |
International Agricultural and Delta Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Agricultural and Delta Insurance
The main advantage of trading using opposite International Agricultural and Delta Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Agricultural position performs unexpectedly, Delta Insurance 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 Delta Insurance will offset losses from the drop in Delta Insurance's long position.The idea behind International Agricultural Products and Delta Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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