Correlation Between Aristocrat Leisure and Robinhood Markets
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Robinhood Markets 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 Aristocrat Leisure and Robinhood Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and Robinhood Markets, you can compare the effects of market volatilities on Aristocrat Leisure and Robinhood Markets 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 Aristocrat Leisure with a short position of Robinhood Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Robinhood Markets.
Diversification Opportunities for Aristocrat Leisure and Robinhood Markets
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aristocrat and Robinhood is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Robinhood Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robinhood Markets and Aristocrat Leisure 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 Aristocrat Leisure Limited are associated (or correlated) with Robinhood Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robinhood Markets has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Robinhood Markets go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Robinhood Markets
Assuming the 90 days horizon Aristocrat Leisure is expected to generate 12.32 times less return on investment than Robinhood Markets. But when comparing it to its historical volatility, Aristocrat Leisure Limited is 2.91 times less risky than Robinhood Markets. It trades about 0.11 of its potential returns per unit of risk. Robinhood Markets is currently generating about 0.46 of returns per unit of risk over similar time horizon. If you would invest 3,743 in Robinhood Markets on October 25, 2024 and sell it today you would earn a total of 1,074 from holding Robinhood Markets or generate 28.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Robinhood Markets
Performance |
| Timeline |
| Aristocrat Leisure |
| Robinhood Markets |
Aristocrat Leisure and Robinhood Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Robinhood Markets
The main advantage of trading using opposite Aristocrat Leisure and Robinhood Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Robinhood Markets 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 Robinhood Markets will offset losses from the drop in Robinhood Markets' long position.| Aristocrat Leisure vs. Wizz Air Holdings | Aristocrat Leisure vs. Columbia Sportswear | Aristocrat Leisure vs. FAIR ISAAC | Aristocrat Leisure vs. PLAYTECH |
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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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