Correlation Between Insurance Australia and MARKET VECTR
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and MARKET VECTR 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 MARKET VECTR 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 MARKET VECTR RETAIL, you can compare the effects of market volatilities on Insurance Australia and MARKET VECTR 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 MARKET VECTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and MARKET VECTR.
Diversification Opportunities for Insurance Australia and MARKET VECTR
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Insurance and MARKET is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of Insurance Australia i.e., Insurance Australia and MARKET VECTR go up and down completely randomly.
Pair Corralation between Insurance Australia and MARKET VECTR
Assuming the 90 days horizon Insurance Australia Group is expected to generate 1.97 times more return on investment than MARKET VECTR. However, Insurance Australia is 1.97 times more volatile than MARKET VECTR RETAIL. It trades about 0.09 of its potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about 0.1 per unit of risk. If you would invest 277.00 in Insurance Australia Group on November 9, 2024 and sell it today you would earn a total of 243.00 from holding Insurance Australia Group or generate 87.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.4% |
| Values | Daily Returns |
Insurance Australia Group vs. MARKET VECTR RETAIL
Performance |
| Timeline |
| Insurance Australia |
| MARKET VECTR RETAIL |
Insurance Australia and MARKET VECTR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and MARKET VECTR
The main advantage of trading using opposite Insurance Australia and MARKET VECTR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, MARKET VECTR 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 MARKET VECTR will offset losses from the drop in MARKET VECTR's long position.| Insurance Australia vs. ALBIS LEASING AG | Insurance Australia vs. ADRIATIC METALS LS 013355 | Insurance Australia vs. FIREWEED METALS P | Insurance Australia vs. Jacquet Metal Service |
| MARKET VECTR vs. MeVis Medical Solutions | MARKET VECTR vs. Haverty Furniture Companies | MARKET VECTR vs. Scandinavian Tobacco Group | MARKET VECTR vs. IMPERIAL TOBACCO |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |