Correlation Between Life Insurance and Investment Trust
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By analyzing existing cross correlation between Life Insurance and The Investment Trust, you can compare the effects of market volatilities on Life Insurance and Investment Trust 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 Investment Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Insurance and Investment Trust.
Diversification Opportunities for Life Insurance and Investment Trust
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Life and Investment is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Life Insurance and The Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Trust 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 Investment Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Trust has no effect on the direction of Life Insurance i.e., Life Insurance and Investment Trust go up and down completely randomly.
Pair Corralation between Life Insurance and Investment Trust
Assuming the 90 days trading horizon Life Insurance is expected to generate 0.73 times more return on investment than Investment Trust. However, Life Insurance is 1.36 times less risky than Investment Trust. It trades about -0.2 of its potential returns per unit of risk. The Investment Trust is currently generating about -0.25 per unit of risk. If you would invest 89,065 in Life Insurance on October 25, 2024 and sell it today you would lose (6,210) from holding Life Insurance or give up 6.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Life Insurance vs. The Investment Trust
Performance |
| Timeline |
| Life Insurance |
| Investment Trust |
Life Insurance and Investment Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Life Insurance and Investment Trust
The main advantage of trading using opposite Life Insurance and Investment Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Insurance position performs unexpectedly, Investment Trust 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 Investment Trust will offset losses from the drop in Investment Trust'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 |
| Investment Trust vs. State Bank of | Investment Trust vs. Life Insurance | Investment Trust vs. HDFC Bank Limited | Investment Trust 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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