Correlation Between Insurance Australia and GREENX METALS
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and GREENX METALS 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 GREENX METALS 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 GREENX METALS LTD, you can compare the effects of market volatilities on Insurance Australia and GREENX METALS 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 GREENX METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and GREENX METALS.
Diversification Opportunities for Insurance Australia and GREENX METALS
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and GREENX is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD 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 GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of Insurance Australia i.e., Insurance Australia and GREENX METALS go up and down completely randomly.
Pair Corralation between Insurance Australia and GREENX METALS
Assuming the 90 days horizon Insurance Australia Group is expected to under-perform the GREENX METALS. But the stock apears to be less risky and, when comparing its historical volatility, Insurance Australia Group is 2.82 times less risky than GREENX METALS. The stock trades about -0.02 of its potential returns per unit of risk. The GREENX METALS LTD is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 37.00 in GREENX METALS LTD on September 25, 2024 and sell it today you would earn a total of 3.00 from holding GREENX METALS LTD or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. GREENX METALS LTD
Performance |
| Timeline |
| Insurance Australia |
| GREENX METALS LTD |
Insurance Australia and GREENX METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and GREENX METALS
The main advantage of trading using opposite Insurance Australia and GREENX METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, GREENX METALS 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 GREENX METALS will offset losses from the drop in GREENX METALS's long position.| Insurance Australia vs. CN MODERN DAIRY | Insurance Australia vs. Ross Stores | Insurance Australia vs. Caseys General Stores | Insurance Australia vs. Tyson Foods |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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