Correlation Between Insurance Australia and Performance Food
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on Insurance Australia and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Performance Food.
Diversification Opportunities for Insurance Australia and Performance Food
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Insurance and Performance is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Insurance Australia i.e., Insurance Australia and Performance Food go up and down completely randomly.
Pair Corralation between Insurance Australia and Performance Food
Assuming the 90 days horizon Insurance Australia Group is expected to generate 1.15 times more return on investment than Performance Food. However, Insurance Australia is 1.15 times more volatile than Performance Food Group. It trades about 0.1 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.1 per unit of risk. If you would invest 320.00 in Insurance Australia Group on September 15, 2024 and sell it today you would earn a total of 178.00 from holding Insurance Australia Group or generate 55.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Performance Food Group
Performance |
| Timeline |
| Insurance Australia |
| Performance Food |
Insurance Australia and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Performance Food
The main advantage of trading using opposite Insurance Australia and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB | Insurance Australia vs. CHINA HUARONG ENERHD 50 | Insurance Australia vs. NORDIC HALIBUT AS |
| Performance Food vs. NorAm Drilling AS | Performance Food vs. Broadridge Financial Solutions | Performance Food vs. Bumrungrad Hospital Public | Performance Food vs. Broadcom |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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