Correlation Between IDP EDUCATION and Assicurazioni Generali

Can any of the company-specific risk be diversified away by investing in both IDP EDUCATION and Assicurazioni Generali 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 IDP EDUCATION and Assicurazioni Generali into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between IDP EDUCATION LTD and Assicurazioni Generali SpA, you can compare the effects of market volatilities on IDP EDUCATION and Assicurazioni Generali 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 IDP EDUCATION with a short position of Assicurazioni Generali. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDP EDUCATION and Assicurazioni Generali.

Diversification Opportunities for IDP EDUCATION and Assicurazioni Generali

-0.43

Correlation Coefficient

IDP EDUCATION  Assicurazioni Generali

Very good diversification

The 3 months correlation between IDP and Assicurazioni is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding IDP EDUCATION LTD and Assicurazioni Generali SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Assicurazioni Generali and IDP EDUCATION 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 IDP EDUCATION LTD are associated (or correlated) with Assicurazioni Generali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Assicurazioni Generali has no effect on the direction of IDP EDUCATION i.e., IDP EDUCATION and Assicurazioni Generali go up and down completely randomly.

Pair Corralation between IDP EDUCATION and Assicurazioni Generali

Assuming the 90 days horizon IDP EDUCATION LTD is expected to under-perform the Assicurazioni Generali. In addition to that, IDP EDUCATION is 5.45 times more volatile than Assicurazioni Generali SpA. It trades about -0.07 of its total potential returns per unit of risk. Assicurazioni Generali SpA is currently generating about 0.3 per unit of volatility. If you would invest  2,729  in Assicurazioni Generali SpA on December 25, 2024 and sell it today you would earn a total of  504.00  from holding Assicurazioni Generali SpA or generate 18.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

IDP EDUCATION LTD  vs.  Assicurazioni Generali SpA

IDP EDUCATION LTD

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDP EDUCATION LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Assicurazioni Generali

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Assicurazioni Generali SpA are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Assicurazioni Generali unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IDP EDUCATION and Assicurazioni Generali

The main advantage of trading using opposite IDP EDUCATION and Assicurazioni Generali positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDP EDUCATION position performs unexpectedly, Assicurazioni Generali 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 Assicurazioni Generali will offset losses from the drop in Assicurazioni Generali's long position.

The idea behind IDP EDUCATION LTD and Assicurazioni Generali SpA 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.