Correlation Between Insurance Australia and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Jacquet Metal 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 Jacquet Metal 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 Jacquet Metal Service, you can compare the effects of market volatilities on Insurance Australia and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Jacquet Metal.
Diversification Opportunities for Insurance Australia and Jacquet Metal
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insurance and Jacquet is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Insurance Australia i.e., Insurance Australia and Jacquet Metal go up and down completely randomly.
Pair Corralation between Insurance Australia and Jacquet Metal
Assuming the 90 days horizon Insurance Australia Group is expected to generate 1.69 times more return on investment than Jacquet Metal. However, Insurance Australia is 1.69 times more volatile than Jacquet Metal Service. It trades about 0.31 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.03 per unit of risk. If you would invest 436.00 in Insurance Australia Group on September 2, 2024 and sell it today you would earn a total of 74.00 from holding Insurance Australia Group or generate 16.97% 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. Jacquet Metal Service
Performance |
| Timeline |
| Insurance Australia |
| Jacquet Metal Service |
Insurance Australia and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Jacquet Metal
The main advantage of trading using opposite Insurance Australia and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.The idea behind Insurance Australia Group and Jacquet Metal Service pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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