Correlation Between Life Insurance and Industrial Investment
Can any of the company-specific risk be diversified away by investing in both Life Insurance and Industrial Investment 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 Life Insurance and Industrial Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Life Insurance and Industrial Investment Trust, you can compare the effects of market volatilities on Life Insurance and Industrial Investment 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 Life Insurance with a short position of Industrial Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Industrial Investment.
Diversification Opportunities for Life Insurance and Industrial Investment
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Life and Industrial is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and Life Insurance 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 Life Insurance are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of Life Insurance i.e., Life Insurance and Industrial Investment go up and down completely randomly.
Pair Corralation between Life Insurance and Industrial Investment
Assuming the 90 days trading horizon Life Insurance is expected to under-perform the Industrial Investment. But the stock apears to be less risky and, when comparing its historical volatility, Life Insurance is 2.0 times less risky than Industrial Investment. The stock trades about -0.03 of its potential returns per unit of risk. The Industrial Investment Trust is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 32,435 in Industrial Investment Trust on August 29, 2024 and sell it today you would earn a total of 5,215 from holding Industrial Investment Trust or generate 16.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Insurance vs. Industrial Investment Trust
Performance |
| Timeline |
| Life Insurance |
| Industrial Investment |
Life Insurance and Industrial Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Insurance and Industrial Investment
The main advantage of trading using opposite Life Insurance and Industrial Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, Industrial Investment 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 Industrial Investment will offset losses from the drop in Industrial Investment's long position.| Life Insurance vs. Gangotri Textiles Limited | Life Insurance vs. Hemisphere Properties India | Life Insurance vs. Kingfa Science Technology | Life Insurance vs. Rico Auto Industries |
| Industrial Investment vs. Reliance Industries Limited | Industrial Investment vs. Life Insurance | Industrial Investment vs. Indian Oil | Industrial Investment vs. Oil Natural Gas |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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