Correlation Between Australian Bond and Australian United
Can any of the company-specific risk be diversified away by investing in both Australian Bond and Australian United 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 Bond and Australian United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Bond Exchange and Australian United Investment, you can compare the effects of market volatilities on Australian Bond and Australian United 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 Bond with a short position of Australian United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Bond and Australian United.
Diversification Opportunities for Australian Bond and Australian United
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Australian and Australian is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Australian Bond Exchange and Australian United Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian United and Australian Bond 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 Bond Exchange are associated (or correlated) with Australian United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian United has no effect on the direction of Australian Bond i.e., Australian Bond and Australian United go up and down completely randomly.
Pair Corralation between Australian Bond and Australian United
Assuming the 90 days trading horizon Australian Bond Exchange is expected to under-perform the Australian United. In addition to that, Australian Bond is 6.8 times more volatile than Australian United Investment. It trades about 0.0 of its total potential returns per unit of risk. Australian United Investment is currently generating about 0.0 per unit of volatility. If you would invest 1,070 in Australian United Investment on September 3, 2024 and sell it today you would lose (2.00) from holding Australian United Investment or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Bond Exchange vs. Australian United Investment
Performance |
| Timeline |
| Australian Bond Exchange |
| Australian United |
Australian Bond and Australian United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Bond and Australian United
The main advantage of trading using opposite Australian Bond and Australian United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Bond position performs unexpectedly, Australian United 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 United will offset losses from the drop in Australian United's long position.| Australian Bond vs. Australian United Investment | Australian Bond vs. Neurotech International | Australian Bond vs. Ras Technology Holdings | Australian Bond vs. WiseTech Global Limited |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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