Correlation Between Insurance Australia and Davide Campari

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

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

Diversification Opportunities for Insurance Australia and Davide Campari

-0.72

Correlation Coefficient

Insurance Australia  Davide Campari

Pay attention - limited upside

The 3 months correlation between Insurance and Davide is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group and Davide Campari Milano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davide Campari Milano and Insurance Australia 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 Australia Group are associated (or correlated) with Davide Campari. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davide Campari Milano has no effect on the direction of Insurance Australia i.e., Insurance Australia and Davide Campari go up and down completely randomly.

Pair Corralation between Insurance Australia and Davide Campari

Assuming the 90 days horizon Insurance Australia Group is expected to generate 0.66 times more return on investment than Davide Campari. However, Insurance Australia Group is 1.52 times less risky than Davide Campari. It trades about -0.04 of its potential returns per unit of risk. Davide Campari Milano is currently generating about -0.09 per unit of risk. If you would invest  510.00  in Insurance Australia Group on October 10, 2024 and sell it today you would lose (5.00) from holding Insurance Australia Group or give up 0.98% of portfolio value over 90 days.

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

Insurance Australia Group  vs.  Davide Campari Milano

Insurance Australia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Insurance Australia Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Insurance Australia reported solid returns over the last few months and may actually be approaching a breakup point.

Davide Campari Milano

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Davide Campari Milano 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Insurance Australia and Davide Campari

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

The idea behind Insurance Australia Group and Davide Campari Milano 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.