Correlation Between Aristocrat Leisure and Packagingof America
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Packagingof America 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 Packagingof America 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 Packaging of, you can compare the effects of market volatilities on Aristocrat Leisure and Packagingof America 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 Packagingof America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Packagingof America.
Diversification Opportunities for Aristocrat Leisure and Packagingof America
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aristocrat and Packagingof is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Packaging of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Packagingof America 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 Packagingof America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Packagingof America has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Packagingof America go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Packagingof America
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 0.83 times more return on investment than Packagingof America. However, Aristocrat Leisure Limited is 1.21 times less risky than Packagingof America. It trades about 0.17 of its potential returns per unit of risk. Packaging of is currently generating about -0.13 per unit of risk. If you would invest 4,100 in Aristocrat Leisure Limited on November 3, 2024 and sell it today you would earn a total of 280.00 from holding Aristocrat Leisure Limited or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Packaging of
Performance |
| Timeline |
| Aristocrat Leisure |
| Packagingof America |
Aristocrat Leisure and Packagingof America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Packagingof America
The main advantage of trading using opposite Aristocrat Leisure and Packagingof America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Packagingof America 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 Packagingof America will offset losses from the drop in Packagingof America's long position.| Aristocrat Leisure vs. Live Nation Entertainment | Aristocrat Leisure vs. CNVISION MEDIA | Aristocrat Leisure vs. Merit Medical Systems | Aristocrat Leisure vs. GigaMedia |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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