Correlation Between Loads and IGI Life
Can any of the company-specific risk be diversified away by investing in both Loads and IGI Life 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 Loads and IGI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loads and IGI Life Insurance, you can compare the effects of market volatilities on Loads and IGI Life 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 Loads with a short position of IGI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loads and IGI Life.
Diversification Opportunities for Loads and IGI Life
Poor diversification
The 3 months correlation between Loads and IGI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Loads and IGI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IGI Life Insurance and Loads 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 Loads are associated (or correlated) with IGI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IGI Life Insurance has no effect on the direction of Loads i.e., Loads and IGI Life go up and down completely randomly.
Pair Corralation between Loads and IGI Life
Assuming the 90 days trading horizon Loads is expected to generate 1.03 times more return on investment than IGI Life. However, Loads is 1.03 times more volatile than IGI Life Insurance. It trades about 0.13 of its potential returns per unit of risk. IGI Life Insurance is currently generating about -0.07 per unit of risk. If you would invest 1,514 in Loads on October 25, 2024 and sell it today you would earn a total of 129.00 from holding Loads or generate 8.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Loads vs. IGI Life Insurance
Performance |
| Timeline |
| Loads |
| IGI Life Insurance |
Loads and IGI Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loads and IGI Life
The main advantage of trading using opposite Loads and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loads position performs unexpectedly, IGI Life 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 IGI Life will offset losses from the drop in IGI Life's long position.The idea behind Loads and IGI Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IGI Life vs. TPL Insurance | IGI Life vs. Engro Polymer Chemicals | IGI Life vs. Sardar Chemical Industries | IGI Life vs. Sitara Chemical Industries |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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