Correlation Between Platinum Asset and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Platinum Asset 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 Platinum Asset and Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum Asset Management and Insignia Financial, you can compare the effects of market volatilities on Platinum Asset 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 Platinum Asset with a short position of Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum Asset and Insignia Financial.
Diversification Opportunities for Platinum Asset and Insignia Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Platinum and Insignia is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Platinum Asset Management and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial and Platinum Asset 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 Platinum Asset Management 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 Platinum Asset i.e., Platinum Asset and Insignia Financial go up and down completely randomly.
Pair Corralation between Platinum Asset and Insignia Financial
Assuming the 90 days trading horizon Platinum Asset is expected to generate 1.99 times less return on investment than Insignia Financial. In addition to that, Platinum Asset is 1.09 times more volatile than Insignia Financial. It trades about 0.04 of its total potential returns per unit of risk. Insignia Financial is currently generating about 0.08 per unit of volatility. If you would invest 228.00 in Insignia Financial on August 27, 2024 and sell it today you would earn a total of 89.00 from holding Insignia Financial or generate 39.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Platinum Asset Management vs. Insignia Financial
Performance |
| Timeline |
| Platinum Asset Management |
| Insignia Financial |
Platinum Asset and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum Asset and Insignia Financial
The main advantage of trading using opposite Platinum Asset and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum Asset 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.| Platinum Asset vs. National Australia Bank | Platinum Asset vs. National Australia Bank | Platinum Asset vs. Westpac Banking | Platinum Asset vs. National Australia Bank |
| Insignia Financial vs. National Australia Bank | Insignia Financial vs. National Australia Bank | Insignia Financial vs. Westpac Banking | Insignia Financial vs. National Australia Bank |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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