Correlation Between Life Insurance and ILFS Investment
Can any of the company-specific risk be diversified away by investing in both Life Insurance and ILFS 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 ILFS 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 ILFS Investment Managers, you can compare the effects of market volatilities on Life Insurance and ILFS 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 ILFS Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and ILFS Investment.
Diversification Opportunities for Life Insurance and ILFS Investment
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Life and ILFS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and ILFS Investment Managers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ILFS Investment Managers 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 ILFS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ILFS Investment Managers has no effect on the direction of Life Insurance i.e., Life Insurance and ILFS Investment go up and down completely randomly.
Pair Corralation between Life Insurance and ILFS Investment
Assuming the 90 days trading horizon Life Insurance is expected to generate 1.83 times less return on investment than ILFS Investment. But when comparing it to its historical volatility, Life Insurance is 1.6 times less risky than ILFS Investment. It trades about 0.04 of its potential returns per unit of risk. ILFS Investment Managers is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 593.00 in ILFS Investment Managers on October 25, 2024 and sell it today you would earn a total of 439.00 from holding ILFS Investment Managers or generate 74.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Life Insurance vs. ILFS Investment Managers
Performance |
| Timeline |
| Life Insurance |
| ILFS Investment Managers |
Life Insurance and ILFS Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Insurance and ILFS Investment
The main advantage of trading using opposite Life Insurance and ILFS Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, ILFS 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 ILFS Investment will offset losses from the drop in ILFS Investment's long position.| Life Insurance vs. State Bank of | Life Insurance vs. HDFC Bank Limited | Life Insurance vs. ICICI Bank Limited | Life Insurance vs. Reliance Industries Limited |
| ILFS Investment vs. State Bank of | ILFS Investment vs. Life Insurance | ILFS Investment vs. HDFC Bank Limited | ILFS Investment vs. ICICI Bank Limited |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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