Correlation Between Aussie Broadband and Super Retail
Can any of the company-specific risk be diversified away by investing in both Aussie Broadband and Super Retail 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 Aussie Broadband and Super Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aussie Broadband and Super Retail Group, you can compare the effects of market volatilities on Aussie Broadband and Super Retail 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 Aussie Broadband with a short position of Super Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aussie Broadband and Super Retail.
Diversification Opportunities for Aussie Broadband and Super Retail
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aussie and Super is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aussie Broadband and Super Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Retail Group and Aussie Broadband 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 Aussie Broadband are associated (or correlated) with Super Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Retail Group has no effect on the direction of Aussie Broadband i.e., Aussie Broadband and Super Retail go up and down completely randomly.
Pair Corralation between Aussie Broadband and Super Retail
Assuming the 90 days trading horizon Aussie Broadband is expected to under-perform the Super Retail. But the stock apears to be less risky and, when comparing its historical volatility, Aussie Broadband is 1.01 times less risky than Super Retail. The stock trades about -0.19 of its potential returns per unit of risk. The Super Retail Group is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 1,514 in Super Retail Group on August 27, 2024 and sell it today you would lose (64.00) from holding Super Retail Group or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aussie Broadband vs. Super Retail Group
Performance |
| Timeline |
| Aussie Broadband |
| Super Retail Group |
Aussie Broadband and Super Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aussie Broadband and Super Retail
The main advantage of trading using opposite Aussie Broadband and Super Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aussie Broadband position performs unexpectedly, Super Retail 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 Super Retail will offset losses from the drop in Super Retail's long position.| Aussie Broadband vs. National Australia Bank | Aussie Broadband vs. National Australia Bank | Aussie Broadband vs. Westpac Banking | Aussie Broadband vs. National Australia Bank |
| Super Retail vs. Skycity Entertainment Group | Super Retail vs. ABACUS STORAGE KING | Super Retail vs. Vulcan Steel | Super Retail vs. My Foodie Box |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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