Correlation Between Corporate Office and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both Corporate Office 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 Corporate Office and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and Insurance Australia Group, you can compare the effects of market volatilities on Corporate Office 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 Corporate Office with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and Insurance Australia.
Diversification Opportunities for Corporate Office and Insurance Australia
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Corporate and Insurance is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Corporate Office 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 Corporate Office Properties 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 Corporate Office i.e., Corporate Office and Insurance Australia go up and down completely randomly.
Pair Corralation between Corporate Office and Insurance Australia
Assuming the 90 days horizon Corporate Office is expected to generate 2.59 times less return on investment than Insurance Australia. But when comparing it to its historical volatility, Corporate Office Properties is 1.56 times less risky than Insurance Australia. It trades about 0.16 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 444.00 in Insurance Australia Group on September 1, 2024 and sell it today you would earn a total of 66.00 from holding Insurance Australia Group or generate 14.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. Insurance Australia Group
Performance |
| Timeline |
| Corporate Office Pro |
| Insurance Australia |
Corporate Office and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and Insurance Australia
The main advantage of trading using opposite Corporate Office and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office 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.| Corporate Office vs. Clean Energy Fuels | Corporate Office vs. BJs Restaurants | Corporate Office vs. FRACTAL GAMING GROUP | Corporate Office vs. ANGLER GAMING PLC |
| Insurance Australia vs. T MOBILE US | Insurance Australia vs. HomeToGo SE | Insurance Australia vs. Iridium Communications | Insurance Australia vs. RYU Apparel |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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