Correlation Between Insurance Australia and X FAB
Can any of the company-specific risk be diversified away by investing in both Insurance Australia and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Insurance Australia and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and X FAB.
Diversification Opportunities for Insurance Australia and X FAB
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Insurance and XFB is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Insurance Australia i.e., Insurance Australia and X FAB go up and down completely randomly.
Pair Corralation between Insurance Australia and X FAB
Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.66 times more return on investment than X FAB. However, Insurance Australia Group is 1.5 times less risky than X FAB. It trades about 0.08 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.01 per unit of risk. If you would invest 262.00 in Insurance Australia Group on September 17, 2024 and sell it today you would earn a total of 230.00 from holding Insurance Australia Group or generate 87.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insurance Australia Group vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Insurance Australia |
| X FAB Silicon |
Insurance Australia and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insurance Australia and X FAB
The main advantage of trading using opposite Insurance Australia and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Insurance Australia vs. EIDESVIK OFFSHORE NK | Insurance Australia vs. SIEM OFFSHORE NEW | Insurance Australia vs. CSSC Offshore Marine | Insurance Australia vs. URBAN OUTFITTERS |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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