Correlation Between Insurance Australia and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and APPLIED MATERIALS 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 APPLIED MATERIALS 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 APPLIED MATERIALS, you can compare the effects of market volatilities on Insurance Australia and APPLIED MATERIALS 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 APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and APPLIED MATERIALS.
Diversification Opportunities for Insurance Australia and APPLIED MATERIALS
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insurance and APPLIED is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS 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 APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of Insurance Australia i.e., Insurance Australia and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between Insurance Australia and APPLIED MATERIALS
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.67 times more return on investment than APPLIED MATERIALS. However, Insurance Australia Group is 1.49 times less risky than APPLIED MATERIALS. It trades about 0.1 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about 0.04 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 Against |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Insurance Australia Group vs. APPLIED MATERIALS
Performance |
| Timeline |
| Insurance Australia |
| APPLIED MATERIALS |
Insurance Australia and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and APPLIED MATERIALS
The main advantage of trading using opposite Insurance Australia and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, APPLIED MATERIALS 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 APPLIED MATERIALS will offset losses from the drop in APPLIED MATERIALS's long position.| Insurance Australia vs. BURLINGTON STORES | Insurance Australia vs. DELTA AIR LINES | Insurance Australia vs. Burlington Stores | Insurance Australia vs. SEALED AIR |
| APPLIED MATERIALS vs. Goodyear Tire Rubber | APPLIED MATERIALS vs. Entravision Communications | APPLIED MATERIALS vs. SBA Communications Corp | APPLIED MATERIALS vs. Ribbon Communications |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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