Correlation Between Dave Busters and Insurance Australia

Can any of the company-specific risk be diversified away by investing in both Dave Busters 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 Dave Busters and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dave Busters Entertainment and Insurance Australia Group, you can compare the effects of market volatilities on Dave Busters 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 Dave Busters with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Insurance Australia.

Diversification Opportunities for Dave Busters and Insurance Australia

-0.08

Correlation Coefficient

Dave Busters  Insurance Australia

Good diversification

The 3 months correlation between Dave and Insurance is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and Insurance Australia go up and down completely randomly.

Pair Corralation between Dave Busters and Insurance Australia

Assuming the 90 days horizon Dave Busters is expected to generate 3.14 times less return on investment than Insurance Australia. In addition to that, Dave Busters is 2.49 times more volatile than Insurance Australia Group. It trades about 0.02 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.13 per unit of volatility. If you would invest  442.00  in Insurance Australia Group on October 8, 2024 and sell it today you would earn a total of  63.00  from holding Insurance Australia Group or generate 14.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dave Busters Entertainment  vs.  Insurance Australia Group

Dave Busters Enterta

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Busters Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Insurance Australia

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Insurance Australia Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Insurance Australia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dave Busters and Insurance Australia

The main advantage of trading using opposite Dave Busters and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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 Dave Busters Entertainment 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.