Correlation Between ARISTOCRAT LEISURE and COMMERCIAL VEHICLE
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and COMMERCIAL VEHICLE, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and COMMERCIAL VEHICLE.
Diversification Opportunities for ARISTOCRAT LEISURE and COMMERCIAL VEHICLE
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ARISTOCRAT and COMMERCIAL is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and COMMERCIAL VEHICLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMERCIAL VEHICLE has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and COMMERCIAL VEHICLE go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and COMMERCIAL VEHICLE
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.27 times more return on investment than COMMERCIAL VEHICLE. However, ARISTOCRAT LEISURE is 3.66 times less risky than COMMERCIAL VEHICLE. It trades about 0.29 of its potential returns per unit of risk. COMMERCIAL VEHICLE is currently generating about -0.12 per unit of risk. If you would invest 2,732 in ARISTOCRAT LEISURE on September 3, 2024 and sell it today you would earn a total of 1,428 from holding ARISTOCRAT LEISURE or generate 52.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. COMMERCIAL VEHICLE
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| COMMERCIAL VEHICLE |
ARISTOCRAT LEISURE and COMMERCIAL VEHICLE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and COMMERCIAL VEHICLE
The main advantage of trading using opposite ARISTOCRAT LEISURE and COMMERCIAL VEHICLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE position performs unexpectedly, COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE will offset losses from the drop in COMMERCIAL VEHICLE's long position.| ARISTOCRAT LEISURE vs. TOTAL GABON | ARISTOCRAT LEISURE vs. Walgreens Boots Alliance | ARISTOCRAT LEISURE vs. Peak Resources Limited |
| COMMERCIAL VEHICLE vs. JD SPORTS FASH | COMMERCIAL VEHICLE vs. ARISTOCRAT LEISURE | COMMERCIAL VEHICLE vs. United Utilities Group | COMMERCIAL VEHICLE vs. Columbia Sportswear |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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