Correlation Between Duxton Broadacre and Insurance Australia

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

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

Diversification Opportunities for Duxton Broadacre and Insurance Australia

-0.44

Correlation Coefficient

Duxton Broadacre  Insurance Australia

Very good diversification

The 3 months correlation between Duxton and Insurance is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Duxton Broadacre Farms and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Duxton Broadacre 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 Duxton Broadacre Farms 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 Duxton Broadacre i.e., Duxton Broadacre and Insurance Australia go up and down completely randomly.

Pair Corralation between Duxton Broadacre and Insurance Australia

Assuming the 90 days trading horizon Duxton Broadacre is expected to generate 1.89 times less return on investment than Insurance Australia. In addition to that, Duxton Broadacre is 1.86 times more volatile than Insurance Australia Group. It trades about 0.04 of its total potential returns per unit of risk. Insurance Australia Group is currently generating about 0.14 per unit of volatility. If you would invest  626.00  in Insurance Australia Group on October 25, 2024 and sell it today you would earn a total of  257.00  from holding Insurance Australia Group or generate 41.05% return on investment over 90 days.

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

Duxton Broadacre Farms  vs.  Insurance Australia Group

Duxton Broadacre Farms

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duxton Broadacre Farms has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Duxton Broadacre is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Insurance Australia

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Insurance Australia Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Insurance Australia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Duxton Broadacre and Insurance Australia

The main advantage of trading using opposite Duxton Broadacre and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duxton Broadacre 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 Duxton Broadacre Farms 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.