Correlation Between Insurance Australia and Neinor Homes
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Neinor Homes 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 Neinor Homes 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 Neinor Homes SA, you can compare the effects of market volatilities on Insurance Australia and Neinor Homes 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 Neinor Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Neinor Homes.
Diversification Opportunities for Insurance Australia and Neinor Homes
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insurance and Neinor is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA 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 Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of Insurance Australia i.e., Insurance Australia and Neinor Homes go up and down completely randomly.
Pair Corralation between Insurance Australia and Neinor Homes
Assuming the 90 days horizon Insurance Australia is expected to generate 1.34 times less return on investment than Neinor Homes. In addition to that, Insurance Australia is 1.0 times more volatile than Neinor Homes SA. It trades about 0.11 of its total potential returns per unit of risk. Neinor Homes SA is currently generating about 0.15 per unit of volatility. If you would invest 888.00 in Neinor Homes SA on November 5, 2024 and sell it today you would earn a total of 758.00 from holding Neinor Homes SA or generate 85.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Neinor Homes SA
Performance |
| Timeline |
| Insurance Australia |
| Neinor Homes SA |
Insurance Australia and Neinor Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Neinor Homes
The main advantage of trading using opposite Insurance Australia and Neinor Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Neinor Homes 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 Neinor Homes will offset losses from the drop in Neinor Homes' long position.| Insurance Australia vs. Fortescue Metals Group | Insurance Australia vs. SBM OFFSHORE | Insurance Australia vs. Jacquet Metal Service | Insurance Australia vs. Transport International Holdings |
| Neinor Homes vs. DALATA HOTEL | Neinor Homes vs. InterContinental Hotels Group | Neinor Homes vs. NH HOTEL GROUP | Neinor Homes vs. CSSC Offshore Marine |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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