Correlation Between INSURANCE AUST and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks PLC, you can compare the effects of market volatilities on INSURANCE AUST and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Fevertree Drinks.
Diversification Opportunities for INSURANCE AUST and Fevertree Drinks
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between INSURANCE and Fevertree is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of INSURANCE AUST i.e., INSURANCE AUST and Fevertree Drinks go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Fevertree Drinks
Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 0.79 times more return on investment than Fevertree Drinks. However, INSURANCE AUST GRP is 1.27 times less risky than Fevertree Drinks. It trades about -0.02 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.06 per unit of risk. If you would invest 500.00 in INSURANCE AUST GRP on September 24, 2024 and sell it today you would lose (4.00) from holding INSURANCE AUST GRP or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Fevertree Drinks PLC
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Fevertree Drinks PLC |
INSURANCE AUST and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Fevertree Drinks
The main advantage of trading using opposite INSURANCE AUST and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| INSURANCE AUST vs. Cleanaway Waste Management | INSURANCE AUST vs. ARDAGH METAL PACDL 0001 | INSURANCE AUST vs. Corporate Travel Management | INSURANCE AUST vs. Yuexiu Transport Infrastructure |
| Fevertree Drinks vs. HANOVER INSURANCE | Fevertree Drinks vs. INSURANCE AUST GRP | Fevertree Drinks vs. Selective Insurance Group | Fevertree Drinks vs. SHIN ETSU CHEMICAL |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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