Correlation Between Insurance Australia and DISTRICT METALS
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and DISTRICT 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 DISTRICT 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 DISTRICT METALS, you can compare the effects of market volatilities on Insurance Australia and DISTRICT 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 DISTRICT METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and DISTRICT METALS.
Diversification Opportunities for Insurance Australia and DISTRICT METALS
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insurance and DISTRICT is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and DISTRICT METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISTRICT METALS 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 DISTRICT METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISTRICT METALS has no effect on the direction of Insurance Australia i.e., Insurance Australia and DISTRICT METALS go up and down completely randomly.
Pair Corralation between Insurance Australia and DISTRICT METALS
Assuming the 90 days horizon Insurance Australia Group is expected to under-perform the DISTRICT METALS. But the stock apears to be less risky and, when comparing its historical volatility, Insurance Australia Group is 2.68 times less risky than DISTRICT METALS. The stock trades about -0.02 of its potential returns per unit of risk. The DISTRICT METALS is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 23.00 in DISTRICT METALS on September 25, 2024 and sell it today you would earn a total of 1.00 from holding DISTRICT METALS or generate 4.35% 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. DISTRICT METALS
Performance |
| Timeline |
| Insurance Australia |
| DISTRICT METALS |
Insurance Australia and DISTRICT METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and DISTRICT METALS
The main advantage of trading using opposite Insurance Australia and DISTRICT METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, DISTRICT 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 DISTRICT METALS will offset losses from the drop in DISTRICT 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 |
| DISTRICT METALS vs. Rio Tinto Group | DISTRICT METALS vs. Anglo American plc | DISTRICT METALS vs. Liontown Resources Limited | DISTRICT METALS vs. NEXA RESOURCES SA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |