Correlation Between ARISTOCRAT LEISURE and Superior Plus
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE and Superior Plus 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 Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Superior Plus Corp, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and Superior Plus 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 Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Superior Plus.
Diversification Opportunities for ARISTOCRAT LEISURE and Superior Plus
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARISTOCRAT and Superior is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp 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 are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Superior Plus go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Superior Plus
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.54 times more return on investment than Superior Plus. However, ARISTOCRAT LEISURE is 1.85 times less risky than Superior Plus. It trades about -0.03 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.02 per unit of risk. If you would invest 4,160 in ARISTOCRAT LEISURE on October 30, 2024 and sell it today you would lose (60.00) from holding ARISTOCRAT LEISURE or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Superior Plus Corp
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Superior Plus Corp |
ARISTOCRAT LEISURE and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Superior Plus
The main advantage of trading using opposite ARISTOCRAT LEISURE and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| ARISTOCRAT LEISURE vs. Playa Hotels Resorts | ARISTOCRAT LEISURE vs. SOFI TECHNOLOGIES | ARISTOCRAT LEISURE vs. LG Display Co | ARISTOCRAT LEISURE vs. PKSHA TECHNOLOGY INC |
| Superior Plus vs. BANKINTER ADR 2007 | Superior Plus vs. Direct Line Insurance | Superior Plus vs. SUN LIFE FINANCIAL | Superior Plus vs. United Airlines Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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