Correlation Between Odyssey Energy and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Odyssey Energy and Insurance Australia 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 Odyssey Energy and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Odyssey Energy and Insurance Australia Group, you can compare the effects of market volatilities on Odyssey Energy and Insurance Australia 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 Odyssey Energy with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Odyssey Energy and Insurance Australia.
Diversification Opportunities for Odyssey Energy and Insurance Australia
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Odyssey and Insurance is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Odyssey Energy and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Odyssey Energy 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 Odyssey Energy are associated (or correlated) with Insurance Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insurance Australia has no effect on the direction of Odyssey Energy i.e., Odyssey Energy and Insurance Australia go up and down completely randomly.
Pair Corralation between Odyssey Energy and Insurance Australia
Assuming the 90 days trading horizon Odyssey Energy is expected to generate 1.06 times less return on investment than Insurance Australia. In addition to that, Odyssey Energy is 5.3 times more volatile than Insurance Australia Group. It trades about 0.02 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.12 per unit of volatility. If you would invest 471.00 in Insurance Australia Group on August 29, 2024 and sell it today you would earn a total of 335.00 from holding Insurance Australia Group or generate 71.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Odyssey Energy vs. Insurance Australia Group
Performance |
| Timeline |
| Odyssey Energy |
| Insurance Australia |
Odyssey Energy and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Odyssey Energy and Insurance Australia
The main advantage of trading using opposite Odyssey Energy and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odyssey Energy position performs unexpectedly, Insurance Australia 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 Insurance Australia will offset losses from the drop in Insurance Australia's long position.| Odyssey Energy vs. Westpac Banking | Odyssey Energy vs. ABACUS STORAGE KING | Odyssey Energy vs. People Infrastructure | Odyssey Energy vs. Insurance Australia Group |
| Insurance Australia vs. Aneka Tambang Tbk | Insurance Australia vs. Woolworths | Insurance Australia vs. Commonwealth Bank | Insurance Australia vs. BHP Group Limited |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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