Correlation Between Insurance Australia and Corporate Office
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and Corporate Office 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 Corporate Office 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 Corporate Office Properties, you can compare the effects of market volatilities on Insurance Australia and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Corporate Office.
Diversification Opportunities for Insurance Australia and Corporate Office
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Insurance and Corporate is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of Insurance Australia i.e., Insurance Australia and Corporate Office go up and down completely randomly.
Pair Corralation between Insurance Australia and Corporate Office
Assuming the 90 days horizon Insurance Australia Group is expected to generate 1.56 times more return on investment than Corporate Office. However, Insurance Australia is 1.56 times more volatile than Corporate Office Properties. It trades about 0.27 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.16 per unit of risk. If you would invest 444.00 in Insurance Australia Group on September 1, 2024 and sell it today you would earn a total of 66.00 from holding Insurance Australia Group or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. Corporate Office Properties
Performance |
| Timeline |
| Insurance Australia |
| Corporate Office Pro |
Insurance Australia and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and Corporate Office
The main advantage of trading using opposite Insurance Australia and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| Insurance Australia vs. T MOBILE US | Insurance Australia vs. HomeToGo SE | Insurance Australia vs. Iridium Communications | Insurance Australia vs. RYU Apparel |
| Corporate Office vs. Clean Energy Fuels | Corporate Office vs. BJs Restaurants | Corporate Office vs. FRACTAL GAMING GROUP | Corporate Office vs. ANGLER GAMING PLC |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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