Correlation Between Oil Natural and General Insurance
Can any of the company-specific risk be diversified away by investing in both Oil Natural and General Insurance 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 Oil Natural and General Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Natural Gas and General Insurance, you can compare the effects of market volatilities on Oil Natural and General Insurance 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 Oil Natural with a short position of General Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Natural and General Insurance.
Diversification Opportunities for Oil Natural and General Insurance
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oil and General is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance and Oil Natural 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 Oil Natural Gas are associated (or correlated) with General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of Oil Natural i.e., Oil Natural and General Insurance go up and down completely randomly.
Pair Corralation between Oil Natural and General Insurance
Assuming the 90 days trading horizon Oil Natural is expected to generate 7.47 times less return on investment than General Insurance. But when comparing it to its historical volatility, Oil Natural Gas is 1.31 times less risky than General Insurance. It trades about 0.04 of its potential returns per unit of risk. General Insurance is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 36,325 in General Insurance on September 5, 2024 and sell it today you would earn a total of 4,340 from holding General Insurance or generate 11.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Natural Gas vs. General Insurance
Performance |
| Timeline |
| Oil Natural Gas |
| General Insurance |
Oil Natural and General Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Natural and General Insurance
The main advantage of trading using opposite Oil Natural and General Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Natural position performs unexpectedly, General Insurance 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 General Insurance will offset losses from the drop in General Insurance's long position.| Oil Natural vs. Digjam Limited | Oil Natural vs. Gujarat Raffia Industries | Oil Natural vs. Edelweiss Financial Services | Oil Natural vs. Tech Mahindra Limited |
| General Insurance vs. Reliance Industries Limited | General Insurance vs. Oil Natural Gas | General Insurance vs. ICICI Bank Limited | General Insurance vs. Bharti Airtel 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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