Correlation Between Insurance Australia and SERI INDUSTRIAL
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and SERI INDUSTRIAL 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO, you can compare the effects of market volatilities on Insurance Australia and SERI INDUSTRIAL 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 SERI INDUSTRIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and SERI INDUSTRIAL.
Diversification Opportunities for Insurance Australia and SERI INDUSTRIAL
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insurance and SERI is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO 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 SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of Insurance Australia i.e., Insurance Australia and SERI INDUSTRIAL go up and down completely randomly.
Pair Corralation between Insurance Australia and SERI INDUSTRIAL
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.39 times more return on investment than SERI INDUSTRIAL. However, Insurance Australia Group is 2.54 times less risky than SERI INDUSTRIAL. It trades about 0.21 of its potential returns per unit of risk. SERI INDUSTRIAL EO is currently generating about -0.13 per unit of risk. If you would invest 500.00 in Insurance Australia Group on October 29, 2024 and sell it today you would earn a total of 25.00 from holding Insurance Australia Group or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. SERI INDUSTRIAL EO
Performance |
| Timeline |
| Insurance Australia |
| SERI INDUSTRIAL EO |
Insurance Australia and SERI INDUSTRIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and SERI INDUSTRIAL
The main advantage of trading using opposite Insurance Australia and SERI INDUSTRIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, SERI INDUSTRIAL 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 SERI INDUSTRIAL will offset losses from the drop in SERI INDUSTRIAL's long position.| Insurance Australia vs. Sunny Optical Technology | Insurance Australia vs. BioNTech SE | Insurance Australia vs. HELIOS TECHS INC | Insurance Australia vs. Easy Software AG |
| SERI INDUSTRIAL vs. MCEWEN MINING INC | SERI INDUSTRIAL vs. ELL ENVIRONHLDGS HD 0001 | SERI INDUSTRIAL vs. MOUNT GIBSON IRON | SERI INDUSTRIAL vs. GALENA MINING LTD |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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