Correlation Between INSURANCE AUST and Vail Resorts

Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST and Vail Resorts 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 INSURANCE AUST and Vail Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INSURANCE AUST GRP and Vail Resorts, you can compare the effects of market volatilities on INSURANCE AUST and Vail Resorts 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 INSURANCE AUST with a short position of Vail Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and Vail Resorts.

Diversification Opportunities for INSURANCE AUST and Vail Resorts

0.87

Correlation Coefficient

INSURANCE AUST  Vail Resorts

Very poor diversification

The 3 months correlation between INSURANCE and Vail is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and Vail Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vail Resorts and INSURANCE AUST 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 INSURANCE AUST GRP are associated (or correlated) with Vail Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vail Resorts has no effect on the direction of INSURANCE AUST i.e., INSURANCE AUST and Vail Resorts go up and down completely randomly.

Pair Corralation between INSURANCE AUST and Vail Resorts

Assuming the 90 days trading horizon INSURANCE AUST GRP is expected to generate 0.75 times more return on investment than Vail Resorts. However, INSURANCE AUST GRP is 1.34 times less risky than Vail Resorts. It trades about 0.14 of its potential returns per unit of risk. Vail Resorts is currently generating about 0.09 per unit of risk. If you would invest  452.00  in INSURANCE AUST GRP on October 20, 2024 and sell it today you would earn a total of  63.00  from holding INSURANCE AUST GRP or generate 13.94% return on investment over 90 days.

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

INSURANCE AUST GRP  vs.  Vail Resorts

INSURANCE AUST GRP

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in INSURANCE AUST GRP are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile primary indicators, INSURANCE AUST exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vail Resorts

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vail Resorts are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vail Resorts may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with INSURANCE AUST and Vail Resorts

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

The idea behind INSURANCE AUST GRP and Vail Resorts 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.