Correlation Between Aristocrat Leisure and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Aristocrat Leisure and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Dow Jones.
Diversification Opportunities for Aristocrat Leisure and Dow Jones
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aristocrat and Dow is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Dow Jones go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Dow Jones
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 2.08 times more return on investment than Dow Jones. However, Aristocrat Leisure is 2.08 times more volatile than Dow Jones Industrial. It trades about 0.22 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of risk. If you would invest 2,680 in Aristocrat Leisure Limited on August 29, 2024 and sell it today you would earn a total of 1,440 from holding Aristocrat Leisure Limited or generate 53.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Dow Jones Industrial
Performance |
| Timeline |
Aristocrat Leisure and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Aristocrat Leisure Limited
Pair trading matchups for Aristocrat Leisure
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Aristocrat Leisure and Dow Jones
The main advantage of trading using opposite Aristocrat Leisure and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Aristocrat Leisure vs. Sea Limited | Aristocrat Leisure vs. Superior Plus Corp | Aristocrat Leisure vs. NMI Holdings | Aristocrat Leisure vs. SIVERS SEMICONDUCTORS AB |
| Dow Jones vs. Kaltura | Dow Jones vs. Artisan Partners Asset | Dow Jones vs. US Global Investors | Dow Jones vs. Analog Devices |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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