Correlation Between Insurance Australia and S A P
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and S A P 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 S A P 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 SAP SE, you can compare the effects of market volatilities on Insurance Australia and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and S A P.
Diversification Opportunities for Insurance Australia and S A P
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insurance and SAP is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Insurance Australia i.e., Insurance Australia and S A P go up and down completely randomly.
Pair Corralation between Insurance Australia and S A P
Assuming the 90 days horizon Insurance Australia Group is expected to under-perform the S A P. In addition to that, Insurance Australia is 1.6 times more volatile than SAP SE. It trades about -0.09 of its total potential returns per unit of risk. SAP SE is currently generating about -0.01 per unit of volatility. If you would invest 24,585 in SAP SE on December 11, 2024 and sell it today you would lose (365.00) from holding SAP SE or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. SAP SE
Performance |
| Timeline |
| Insurance Australia |
| SAP SE |
Insurance Australia and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and S A P
The main advantage of trading using opposite Insurance Australia and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| Insurance Australia vs. GALENA MINING LTD | Insurance Australia vs. CN DATANG C | Insurance Australia vs. STORAGEVAULT CANADA INC | Insurance Australia vs. NTT DATA |
| S A P vs. Games Workshop Group | S A P vs. GAMEON ENTERTAINM TECHS | S A P vs. Broadcom | S A P vs. Yuexiu Transport Infrastructure |
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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