Correlation Between Performance Food and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Performance Food 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 Performance Food and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Insurance Australia Group, you can compare the effects of market volatilities on Performance Food 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 Performance Food with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Insurance Australia.
Diversification Opportunities for Performance Food and Insurance Australia
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Performance and Insurance is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Performance Food 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 Performance Food Group 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 Performance Food i.e., Performance Food and Insurance Australia go up and down completely randomly.
Pair Corralation between Performance Food and Insurance Australia
Assuming the 90 days trading horizon Performance Food is expected to generate 1.17 times less return on investment than Insurance Australia. But when comparing it to its historical volatility, Performance Food Group is 1.15 times less risky than Insurance Australia. It trades about 0.1 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 320.00 in Insurance Australia Group on September 15, 2024 and sell it today you would earn a total of 178.00 from holding Insurance Australia Group or generate 55.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Insurance Australia Group
Performance |
| Timeline |
| Performance Food |
| Insurance Australia |
Performance Food and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Insurance Australia
The main advantage of trading using opposite Performance Food and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food 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.| Performance Food vs. NorAm Drilling AS | Performance Food vs. Broadridge Financial Solutions | Performance Food vs. Bumrungrad Hospital Public | Performance Food vs. Broadcom |
| Insurance Australia vs. Superior Plus Corp | Insurance Australia vs. SIVERS SEMICONDUCTORS AB | Insurance Australia vs. CHINA HUARONG ENERHD 50 | Insurance Australia vs. NORDIC HALIBUT AS |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |