Correlation Between INSURANCE AUST and Compagnie
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST and Compagnie 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 Compagnie 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 Compagnie de Saint Gobain, you can compare the effects of market volatilities on INSURANCE AUST and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Compagnie.
Diversification Opportunities for INSURANCE AUST and Compagnie
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INSURANCE and Compagnie is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of INSURANCE AUST i.e., INSURANCE AUST and Compagnie go up and down completely randomly.
Pair Corralation between INSURANCE AUST and Compagnie
Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 0.8 times more return on investment than Compagnie. However, INSURANCE AUST GRP is 1.25 times less risky than Compagnie. It trades about 0.22 of its potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about 0.07 per unit of risk. If you would invest 500.00 in INSURANCE AUST GRP on October 29, 2024 and sell it today you would earn a total of 25.00 from holding INSURANCE AUST GRP or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| INSURANCE AUST GRP |
| Compagnie de Saint |
INSURANCE AUST and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and Compagnie
The main advantage of trading using opposite INSURANCE AUST and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| INSURANCE AUST vs. Canon Marketing Japan | INSURANCE AUST vs. CANON MARKETING JP | INSURANCE AUST vs. Tradeweb Markets | INSURANCE AUST vs. DICKS Sporting Goods |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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