Correlation Between INSURANCE AUST and Peloton Interactive
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST and Peloton Interactive 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 INSURANCE AUST and Peloton Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and Peloton Interactive, you can compare the effects of market volatilities on INSURANCE AUST and Peloton Interactive 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 INSURANCE AUST with a short position of Peloton Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Peloton Interactive.
Diversification Opportunities for INSURANCE AUST and Peloton Interactive
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INSURANCE and Peloton is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Peloton Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peloton Interactive and INSURANCE AUST 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 INSURANCE AUST GRP are associated (or correlated) with Peloton Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peloton Interactive has no effect on the direction of INSURANCE AUST i.e., INSURANCE AUST and Peloton Interactive go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Peloton Interactive
Assuming the 90 days trading horizon INSURANCE AUST is expected to generate 1.47 times less return on investment than Peloton Interactive. But when comparing it to its historical volatility, INSURANCE AUST GRP is 4.07 times less risky than Peloton Interactive. It trades about 0.09 of its potential returns per unit of risk. Peloton Interactive is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 841.00 in Peloton Interactive on September 12, 2024 and sell it today you would earn a total of 91.00 from holding Peloton Interactive or generate 10.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Peloton Interactive
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Peloton Interactive |
INSURANCE AUST and Peloton Interactive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Peloton Interactive
The main advantage of trading using opposite INSURANCE AUST and Peloton Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST position performs unexpectedly, Peloton Interactive 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 Peloton Interactive will offset losses from the drop in Peloton Interactive's long position.| INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc |
| Peloton Interactive vs. INSURANCE AUST GRP | Peloton Interactive vs. Monster Beverage Corp | Peloton Interactive vs. SBI Insurance Group | Peloton Interactive vs. ScanSource |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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