Correlation Between Insignia Financial and Rea
Can any of the company-specific risk be diversified away by investing in both Insignia Financial and Rea 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 Rea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insignia Financial and Rea Group, you can compare the effects of market volatilities on Insignia Financial and Rea 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 Rea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insignia Financial and Rea.
Diversification Opportunities for Insignia Financial and Rea
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Insignia and Rea is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Rea Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rea Group 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 Rea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rea Group has no effect on the direction of Insignia Financial i.e., Insignia Financial and Rea go up and down completely randomly.
Pair Corralation between Insignia Financial and Rea
Assuming the 90 days trading horizon Insignia Financial is expected to under-perform the Rea. In addition to that, Insignia Financial is 1.34 times more volatile than Rea Group. It trades about -0.16 of its total potential returns per unit of risk. Rea Group is currently generating about 0.26 per unit of volatility. If you would invest 23,199 in Rea Group on August 29, 2024 and sell it today you would earn a total of 1,904 from holding Rea Group or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insignia Financial vs. Rea Group
Performance |
| Timeline |
| Insignia Financial |
| Rea Group |
Insignia Financial and Rea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insignia Financial and Rea
The main advantage of trading using opposite Insignia Financial and Rea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial position performs unexpectedly, Rea 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 Rea will offset losses from the drop in Rea's long position.| Insignia Financial vs. Champion Iron | Insignia Financial vs. Ridley | Insignia Financial vs. Peel Mining | Insignia Financial vs. Australian Dairy Farms |
| Rea vs. Regal Investment | Rea vs. Australian United Investment | Rea vs. EMvision Medical Devices | Rea 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |