Correlation Between Insurance Australia and Focus Home
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Focus Home 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 Focus Home 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 Focus Home Interactive, you can compare the effects of market volatilities on Insurance Australia and Focus Home 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 Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Focus Home.
Diversification Opportunities for Insurance Australia and Focus Home
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insurance and Focus is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive 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 Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of Insurance Australia i.e., Insurance Australia and Focus Home go up and down completely randomly.
Pair Corralation between Insurance Australia and Focus Home
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.51 times more return on investment than Focus Home. However, Insurance Australia Group is 1.95 times less risky than Focus Home. It trades about 0.17 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.27 per unit of risk. If you would invest 496.00 in Insurance Australia Group on November 8, 2024 and sell it today you would earn a total of 24.00 from holding Insurance Australia Group or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Focus Home Interactive
Performance |
| Timeline |
| Insurance Australia |
| Focus Home Interactive |
Insurance Australia and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Focus Home
The main advantage of trading using opposite Insurance Australia and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.| Insurance Australia vs. IMPERIAL TOBACCO | Insurance Australia vs. Universal Display | Insurance Australia vs. ANTA SPORTS PRODUCT | Insurance Australia vs. USWE SPORTS AB |
| Focus Home vs. FAST RETAIL ADR | Focus Home vs. Cairo Communication SpA | Focus Home vs. H2O Retailing | Focus Home vs. PICKN PAY STORES |
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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