Correlation Between Mari Petroleum and IGI Life
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum 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 Mari Petroleum and IGI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and IGI Life Insurance, you can compare the effects of market volatilities on Mari Petroleum 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 Mari Petroleum with a short position of IGI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and IGI Life.
Diversification Opportunities for Mari Petroleum and IGI Life
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mari and IGI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum 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 Mari Petroleum 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 Mari Petroleum 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 Mari Petroleum i.e., Mari Petroleum and IGI Life go up and down completely randomly.
Pair Corralation between Mari Petroleum and IGI Life
Assuming the 90 days trading horizon Mari Petroleum is expected to under-perform the IGI Life. But the stock apears to be less risky and, when comparing its historical volatility, Mari Petroleum is 1.17 times less risky than IGI Life. The stock trades about -0.25 of its potential returns per unit of risk. The IGI Life Insurance is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,471 in IGI Life Insurance on October 25, 2024 and sell it today you would lose (77.00) from holding IGI Life Insurance or give up 5.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Mari Petroleum vs. IGI Life Insurance
Performance |
| Timeline |
| Mari Petroleum |
| IGI Life Insurance |
Mari Petroleum and IGI Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mari Petroleum and IGI Life
The main advantage of trading using opposite Mari Petroleum and IGI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum 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.| Mari Petroleum vs. Amreli Steels | Mari Petroleum vs. JS Investments | Mari Petroleum vs. Air Link Communication | Mari Petroleum vs. Metropolitan Steel Corp |
| 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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