Correlation Between ARISTOCRAT LEISURE and Hexcel
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE and Hexcel 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 Hexcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Hexcel, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and Hexcel 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 Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Hexcel.
Diversification Opportunities for ARISTOCRAT LEISURE and Hexcel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ARISTOCRAT and Hexcel is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Hexcel go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Hexcel
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.65 times more return on investment than Hexcel. However, ARISTOCRAT LEISURE is 1.53 times less risky than Hexcel. It trades about 0.15 of its potential returns per unit of risk. Hexcel is currently generating about -0.01 per unit of risk. If you would invest 2,254 in ARISTOCRAT LEISURE on September 12, 2024 and sell it today you would earn a total of 1,886 from holding ARISTOCRAT LEISURE or generate 83.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Hexcel
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Hexcel |
ARISTOCRAT LEISURE and Hexcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Hexcel
The main advantage of trading using opposite ARISTOCRAT LEISURE and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.| ARISTOCRAT LEISURE vs. SOLSTAD OFFSHORE NK | ARISTOCRAT LEISURE vs. SIMS METAL MGT | ARISTOCRAT LEISURE vs. Tyson Foods | ARISTOCRAT LEISURE vs. SBM OFFSHORE |
| Hexcel vs. Postal Savings Bank | Hexcel vs. Japan Asia Investment | Hexcel vs. AGF Management Limited | Hexcel vs. Q2M Managementberatung AG |
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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