Correlation Between Medibank Private and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Medibank Private and Australian Unity 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 Medibank Private and Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medibank Private and Australian Unity Ltd, you can compare the effects of market volatilities on Medibank Private and Australian Unity 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 Medibank Private with a short position of Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medibank Private and Australian Unity.
Diversification Opportunities for Medibank Private and Australian Unity
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Medibank and Australian is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Medibank Private and Australian Unity Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity and Medibank Private 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 Medibank Private are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity has no effect on the direction of Medibank Private i.e., Medibank Private and Australian Unity go up and down completely randomly.
Pair Corralation between Medibank Private and Australian Unity
Assuming the 90 days trading horizon Medibank Private is expected to generate 1.74 times more return on investment than Australian Unity. However, Medibank Private is 1.74 times more volatile than Australian Unity Ltd. It trades about 0.1 of its potential returns per unit of risk. Australian Unity Ltd is currently generating about -0.02 per unit of risk. If you would invest 369.00 in Medibank Private on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Medibank Private or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medibank Private vs. Australian Unity Ltd
Performance |
| Timeline |
| Medibank Private |
| Australian Unity |
Medibank Private and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medibank Private and Australian Unity
The main advantage of trading using opposite Medibank Private and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medibank Private position performs unexpectedly, Australian Unity 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 Australian Unity will offset losses from the drop in Australian Unity's long position.| Medibank Private vs. Aneka Tambang Tbk | Medibank Private vs. Commonwealth Bank | Medibank Private vs. BHP Group Limited | Medibank Private vs. Rio Tinto |
| Australian Unity vs. Medibank Private | Australian Unity vs. Insignia Financial | Australian Unity vs. Cleanaway Waste Management | Australian Unity vs. Qbe Insurance Group |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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