Correlation Between Australian High and Australian Corporate
Can any of the company-specific risk be diversified away by investing in both Australian High and Australian Corporate 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 Australian High and Australian Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian High Interest and Australian Corporate Bond, you can compare the effects of market volatilities on Australian High and Australian Corporate 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 Australian High with a short position of Australian Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian High and Australian Corporate.
Diversification Opportunities for Australian High and Australian Corporate
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Australian and Australian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Australian High Interest and Australian Corporate Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Corporate Bond and Australian High 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 Australian High Interest are associated (or correlated) with Australian Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Corporate Bond has no effect on the direction of Australian High i.e., Australian High and Australian Corporate go up and down completely randomly.
Pair Corralation between Australian High and Australian Corporate
If you would invest 5,006 in Australian High Interest on August 29, 2024 and sell it today you would earn a total of 18.00 from holding Australian High Interest or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Australian High Interest vs. Australian Corporate Bond
Performance |
| Timeline |
| Australian High Interest |
| Australian Corporate Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Australian High and Australian Corporate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian High and Australian Corporate
The main advantage of trading using opposite Australian High and Australian Corporate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian High position performs unexpectedly, Australian Corporate 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 Australian Corporate will offset losses from the drop in Australian Corporate's long position.The idea behind Australian High Interest and Australian Corporate Bond 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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