Correlation Between TRADEGATE and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both TRADEGATE 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 TRADEGATE and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRADEGATE and Insurance Australia Group, you can compare the effects of market volatilities on TRADEGATE 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 TRADEGATE with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRADEGATE and Insurance Australia.
Diversification Opportunities for TRADEGATE and Insurance Australia
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between TRADEGATE and Insurance is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding TRADEGATE and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and TRADEGATE 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 TRADEGATE 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 TRADEGATE i.e., TRADEGATE and Insurance Australia go up and down completely randomly.
Pair Corralation between TRADEGATE and Insurance Australia
Assuming the 90 days trading horizon TRADEGATE is expected to under-perform the Insurance Australia. But the stock apears to be less risky and, when comparing its historical volatility, TRADEGATE is 5.85 times less risky than Insurance Australia. The stock trades about -0.12 of its potential returns per unit of risk. The Insurance Australia Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 510.00 in Insurance Australia Group on November 9, 2024 and sell it today you would earn a total of 10.00 from holding Insurance Australia Group or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TRADEGATE vs. Insurance Australia Group
Performance |
| Timeline |
| TRADEGATE |
| Insurance Australia |
TRADEGATE and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TRADEGATE and Insurance Australia
The main advantage of trading using opposite TRADEGATE and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRADEGATE 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.| TRADEGATE vs. Fukuyama Transporting Co | TRADEGATE vs. DICKS Sporting Goods | TRADEGATE vs. Gaztransport Technigaz SA | TRADEGATE vs. SCIENCE IN SPORT |
| Insurance Australia vs. ALBIS LEASING AG | Insurance Australia vs. ADRIATIC METALS LS 013355 | Insurance Australia vs. FIREWEED METALS P | Insurance Australia vs. Jacquet Metal Service |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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