Correlation Between X FAB and Insurance Australia
Can any of the company-specific risk be diversified away by investing in both X FAB 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 X FAB and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Insurance Australia Group, you can compare the effects of market volatilities on X FAB 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 X FAB with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Insurance Australia.
Diversification Opportunities for X FAB and Insurance Australia
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XFB and Insurance is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and X FAB 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 X FAB Silicon Foundries 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 X FAB i.e., X FAB and Insurance Australia go up and down completely randomly.
Pair Corralation between X FAB and Insurance Australia
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to generate 1.28 times more return on investment than Insurance Australia. However, X FAB is 1.28 times more volatile than Insurance Australia Group. It trades about 0.22 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.06 per unit of risk. If you would invest 437.00 in X FAB Silicon Foundries on September 16, 2024 and sell it today you would earn a total of 60.00 from holding X FAB Silicon Foundries or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Insurance Australia Group
Performance |
| Timeline |
| X FAB Silicon |
| Insurance Australia |
X FAB and Insurance Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Insurance Australia
The main advantage of trading using opposite X FAB and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB 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.The idea behind X FAB Silicon Foundries and Insurance Australia Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |