Correlation Between Insurance Australia and Varta AG
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Varta AG 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 Varta AG 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 Varta AG, you can compare the effects of market volatilities on Insurance Australia and Varta AG 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 Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Varta AG.
Diversification Opportunities for Insurance Australia and Varta AG
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Insurance and Varta is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta AG 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Insurance Australia i.e., Insurance Australia and Varta AG go up and down completely randomly.
Pair Corralation between Insurance Australia and Varta AG
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.21 times more return on investment than Varta AG. However, Insurance Australia Group is 4.76 times less risky than Varta AG. It trades about 0.12 of its potential returns per unit of risk. Varta AG is currently generating about -0.12 per unit of risk. If you would invest 496.00 in Insurance Australia Group on October 12, 2024 and sell it today you would earn a total of 14.00 from holding Insurance Australia Group or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Insurance Australia Group vs. Varta AG
Performance |
| Timeline |
| Insurance Australia |
| Varta AG |
Insurance Australia and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Varta AG
The main advantage of trading using opposite Insurance Australia and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Varta AG 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 Varta AG will offset losses from the drop in Varta AG's long position.| Insurance Australia vs. ASPEN TECHINC DL | Insurance Australia vs. ANGLO ASIAN MINING | Insurance Australia vs. Siamgas And Petrochemicals | Insurance Australia vs. Addtech AB |
| Varta AG vs. Garofalo Health Care | Varta AG vs. JAPAN AIRLINES | Varta AG vs. US Physical Therapy | Varta AG vs. Southwest Airlines Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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