Correlation Between Globex Mining and Insurance Australia

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Can any of the company-specific risk be diversified away by investing in both Globex Mining 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 Globex Mining and Insurance Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and Insurance Australia Group, you can compare the effects of market volatilities on Globex Mining 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 Globex Mining with a short position of Insurance Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Insurance Australia.

Diversification Opportunities for Globex Mining and Insurance Australia

GlobexInsuranceDiversified AwayGlobexInsuranceDiversified Away100%
0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Globex and Insurance is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Insurance Australia Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insurance Australia and Globex Mining 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 Globex Mining Enterprises 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 Globex Mining i.e., Globex Mining and Insurance Australia go up and down completely randomly.

Pair Corralation between Globex Mining and Insurance Australia

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 0.88 times more return on investment than Insurance Australia. However, Globex Mining Enterprises is 1.14 times less risky than Insurance Australia. It trades about 0.35 of its potential returns per unit of risk. Insurance Australia Group is currently generating about 0.17 per unit of risk. If you would invest  70.00  in Globex Mining Enterprises on October 31, 2024 and sell it today you would earn a total of  26.00  from holding Globex Mining Enterprises or generate 37.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Globex Mining Enterprises  vs.  Insurance Australia Group

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -505101520
JavaScript chart by amCharts 3.21.15G1MN NRM
       Timeline  
Globex Mining Enterprises 

Risk-Adjusted Performance

27 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Globex Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.70.750.80.850.90.95
Insurance Australia 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Insurance Australia Group are ranked lower than 13 (%) 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.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan4.44.54.64.74.84.955.15.2

Globex Mining and Insurance Australia Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.68-3.51-2.33-1.160.01.32.654.05.356.69 0.050.100.15
JavaScript chart by amCharts 3.21.15G1MN NRM
       Returns  

Pair Trading with Globex Mining and Insurance Australia

The main advantage of trading using opposite Globex Mining and Insurance Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining 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 Globex Mining Enterprises 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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