Correlation Between Premier Investments and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Premier Investments and Insignia Financial 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 Premier Investments and Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Investments and Insignia Financial, you can compare the effects of market volatilities on Premier Investments and Insignia Financial 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 Premier Investments with a short position of Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Investments and Insignia Financial.
Diversification Opportunities for Premier Investments and Insignia Financial
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Premier and Insignia is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Premier Investments and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial and Premier Investments 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 Premier Investments are associated (or correlated) with Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Premier Investments i.e., Premier Investments and Insignia Financial go up and down completely randomly.
Pair Corralation between Premier Investments and Insignia Financial
Assuming the 90 days trading horizon Premier Investments is expected to under-perform the Insignia Financial. But the stock apears to be less risky and, when comparing its historical volatility, Premier Investments is 3.67 times less risky than Insignia Financial. The stock trades about -0.17 of its potential returns per unit of risk. The Insignia Financial is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 306.00 in Insignia Financial on October 12, 2024 and sell it today you would earn a total of 98.00 from holding Insignia Financial or generate 32.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Premier Investments vs. Insignia Financial
Performance |
| Timeline |
| Premier Investments |
| Insignia Financial |
Premier Investments and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Premier Investments and Insignia Financial
The main advantage of trading using opposite Premier Investments and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Investments position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| Premier Investments vs. Westpac Banking | Premier Investments vs. Ecofibre | Premier Investments vs. iShares Global Healthcare | Premier Investments vs. Australian Dairy Farms |
| Insignia Financial vs. Queste Communications | Insignia Financial vs. Home Consortium | Insignia Financial vs. Sandon Capital Investments | Insignia Financial vs. Premier Investments |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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