Correlation Between Insurance Australia and Materialise
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Materialise 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 Australia and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and Materialise NV, you can compare the effects of market volatilities on Insurance Australia and Materialise 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 Australia with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Materialise.
Diversification Opportunities for Insurance Australia and Materialise
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insurance and Materialise is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Insurance Australia 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 Australia Group are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of Insurance Australia i.e., Insurance Australia and Materialise go up and down completely randomly.
Pair Corralation between Insurance Australia and Materialise
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.56 times more return on investment than Materialise. However, Insurance Australia Group is 1.79 times less risky than Materialise. It trades about 0.1 of its potential returns per unit of risk. Materialise NV is currently generating about -0.01 per unit of risk. If you would invest 282.00 in Insurance Australia Group on August 31, 2024 and sell it today you would earn a total of 228.00 from holding Insurance Australia Group or generate 80.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Insurance Australia Group vs. Materialise NV
Performance |
| Timeline |
| Insurance Australia |
| Materialise NV |
Insurance Australia and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Materialise
The main advantage of trading using opposite Insurance Australia and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.| Insurance Australia vs. BURLINGTON STORES | Insurance Australia vs. DELTA AIR LINES | Insurance Australia vs. Burlington Stores | Insurance Australia vs. SEALED AIR |
| Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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