Correlation Between Popular and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Popular 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 Popular and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Popular and Insurance Australia Group, you can compare the effects of market volatilities on Popular 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 Popular with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Popular and Insurance Australia.
Diversification Opportunities for Popular and Insurance Australia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Popular and Insurance is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Popular and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Popular 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 Popular 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 Popular i.e., Popular and Insurance Australia go up and down completely randomly.
Pair Corralation between Popular and Insurance Australia
Assuming the 90 days trading horizon Popular is expected to generate 1.22 times less return on investment than Insurance Australia. In addition to that, Popular is 1.17 times more volatile than Insurance Australia Group. It trades about 0.06 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.09 per unit of volatility. If you would invest 262.00 in Insurance Australia Group on September 14, 2024 and sell it today you would earn a total of 236.00 from holding Insurance Australia Group or generate 90.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Popular vs. Insurance Australia Group
Performance |
| Timeline |
| Popular |
| Insurance Australia |
Popular and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Popular and Insurance Australia
The main advantage of trading using opposite Popular and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Popular 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.| Popular vs. LIFENET INSURANCE CO | Popular vs. Selective Insurance Group | Popular vs. Universal Insurance Holdings | Popular vs. Ping An Insurance |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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