Correlation Between Insignia Financial and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Insignia Financial and Aristocrat Leisure 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 Insignia Financial and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insignia Financial and Aristocrat Leisure, you can compare the effects of market volatilities on Insignia Financial and Aristocrat Leisure 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 Insignia Financial with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insignia Financial and Aristocrat Leisure.
Diversification Opportunities for Insignia Financial and Aristocrat Leisure
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insignia and Aristocrat is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and Insignia Financial 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 Insignia Financial are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Insignia Financial i.e., Insignia Financial and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Insignia Financial and Aristocrat Leisure
Assuming the 90 days trading horizon Insignia Financial is expected to generate 1.02 times more return on investment than Aristocrat Leisure. However, Insignia Financial is 1.02 times more volatile than Aristocrat Leisure. It trades about 0.25 of its potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.13 per unit of risk. If you would invest 406.00 in Insignia Financial on November 6, 2024 and sell it today you would earn a total of 37.00 from holding Insignia Financial or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Insignia Financial vs. Aristocrat Leisure
Performance |
| Timeline |
| Insignia Financial |
| Aristocrat Leisure |
Insignia Financial and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insignia Financial and Aristocrat Leisure
The main advantage of trading using opposite Insignia Financial and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Insignia Financial vs. Diversified United Investment | Insignia Financial vs. Hutchison Telecommunications | Insignia Financial vs. Charter Hall Retail | Insignia Financial vs. Mirrabooka Investments |
| Aristocrat Leisure vs. Centaurus Metals | Aristocrat Leisure vs. Beston Global Food | Aristocrat Leisure vs. Cleanaway Waste Management | Aristocrat Leisure vs. Aurelia Metals |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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