Correlation Between INSURANCE AUST and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST and Evonik Industries 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 Evonik Industries 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 Evonik Industries AG, you can compare the effects of market volatilities on INSURANCE AUST and Evonik Industries 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 Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Evonik Industries.
Diversification Opportunities for INSURANCE AUST and Evonik Industries
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between INSURANCE and Evonik is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries 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 Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of INSURANCE AUST i.e., INSURANCE AUST and Evonik Industries go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Evonik Industries
Assuming the 90 days trading horizon INSURANCE AUST is expected to generate 1.59 times less return on investment than Evonik Industries. But when comparing it to its historical volatility, INSURANCE AUST GRP is 1.07 times less risky than Evonik Industries. It trades about 0.2 of its potential returns per unit of risk. Evonik Industries AG is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,647 in Evonik Industries AG on October 23, 2024 and sell it today you would earn a total of 121.00 from holding Evonik Industries AG or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Evonik Industries AG
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Evonik Industries |
INSURANCE AUST and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Evonik Industries
The main advantage of trading using opposite INSURANCE AUST and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' long position.| INSURANCE AUST vs. Ribbon Communications | INSURANCE AUST vs. Zoom Video Communications | INSURANCE AUST vs. De Grey Mining | INSURANCE AUST vs. Geely Automobile Holdings |
| Evonik Industries vs. Linde plc | Evonik Industries vs. Linde PLC | Evonik Industries vs. Air Liquide SA | Evonik Industries vs. Ecolab Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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