Correlation Between Aristocrat Leisure and Trade Desk
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Trade Desk 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 Trade Desk 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 The Trade Desk, you can compare the effects of market volatilities on Aristocrat Leisure and Trade Desk 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 Trade Desk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Trade Desk.
Diversification Opportunities for Aristocrat Leisure and Trade Desk
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aristocrat and Trade is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Trade Desk go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Trade Desk
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 0.8 times more return on investment than Trade Desk. However, Aristocrat Leisure Limited is 1.25 times less risky than Trade Desk. It trades about 0.12 of its potential returns per unit of risk. The Trade Desk is currently generating about -0.12 per unit of risk. If you would invest 4,240 in Aristocrat Leisure Limited on November 9, 2024 and sell it today you would earn a total of 180.00 from holding Aristocrat Leisure Limited or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. The Trade Desk
Performance |
| Timeline |
| Aristocrat Leisure |
| Trade Desk |
Aristocrat Leisure and Trade Desk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Trade Desk
The main advantage of trading using opposite Aristocrat Leisure and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Trade Desk 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 Trade Desk will offset losses from the drop in Trade Desk's long position.| Aristocrat Leisure vs. CompuGroup Medical SE | Aristocrat Leisure vs. EITZEN CHEMICALS | Aristocrat Leisure vs. CVR Medical Corp | Aristocrat Leisure vs. PEPTONIC MEDICAL |
| Trade Desk vs. INTERNET INJPADR 1 | Trade Desk vs. China Communications Services | Trade Desk vs. MeVis Medical Solutions | Trade Desk vs. TELECOM ITALRISP ADR10 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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