Correlation Between IGI Life and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both IGI Life and Universal 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 IGI Life and Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IGI Life Insurance and Universal Insurance, you can compare the effects of market volatilities on IGI Life and Universal 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 IGI Life with a short position of Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of IGI Life and Universal Insurance.
Diversification Opportunities for IGI Life and Universal Insurance
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IGI and Universal is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding IGI Life Insurance and Universal Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance and IGI Life 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 IGI Life Insurance are associated (or correlated) with Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of IGI Life i.e., IGI Life and Universal Insurance go up and down completely randomly.
Pair Corralation between IGI Life and Universal Insurance
Assuming the 90 days trading horizon IGI Life Insurance is expected to generate 0.53 times more return on investment than Universal Insurance. However, IGI Life Insurance is 1.88 times less risky than Universal Insurance. It trades about -0.24 of its potential returns per unit of risk. Universal Insurance is currently generating about -0.15 per unit of risk. If you would invest 1,585 in IGI Life Insurance on October 30, 2024 and sell it today you would lose (191.00) from holding IGI Life Insurance or give up 12.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.0% |
| Values | Daily Returns |
IGI Life Insurance vs. Universal Insurance
Performance |
| Timeline |
| IGI Life Insurance |
| Universal Insurance |
IGI Life and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IGI Life and Universal Insurance
The main advantage of trading using opposite IGI Life and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IGI Life position performs unexpectedly, Universal 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| IGI Life vs. Metropolitan Steel Corp | IGI Life vs. JS Bank | IGI Life vs. Amreli Steels | IGI Life vs. Apna Microfinance Bank |
| Universal Insurance vs. Pakistan Tobacco | Universal Insurance vs. Premier Insurance | Universal Insurance vs. ORIX Leasing Pakistan | Universal Insurance vs. Orient Rental Modaraba |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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