Correlation Between Austral Gold and Duxton Broadacre
Can any of the company-specific risk be diversified away by investing in both Austral Gold and Duxton Broadacre 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 Austral Gold and Duxton Broadacre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austral Gold and Duxton Broadacre Farms, you can compare the effects of market volatilities on Austral Gold and Duxton Broadacre 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 Austral Gold with a short position of Duxton Broadacre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austral Gold and Duxton Broadacre.
Diversification Opportunities for Austral Gold and Duxton Broadacre
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Austral and Duxton is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold and Duxton Broadacre Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duxton Broadacre Farms and Austral Gold 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 Austral Gold are associated (or correlated) with Duxton Broadacre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duxton Broadacre Farms has no effect on the direction of Austral Gold i.e., Austral Gold and Duxton Broadacre go up and down completely randomly.
Pair Corralation between Austral Gold and Duxton Broadacre
Assuming the 90 days trading horizon Austral Gold is expected to generate 4.63 times more return on investment than Duxton Broadacre. However, Austral Gold is 4.63 times more volatile than Duxton Broadacre Farms. It trades about 0.02 of its potential returns per unit of risk. Duxton Broadacre Farms is currently generating about -0.03 per unit of risk. If you would invest 2.20 in Austral Gold on September 3, 2024 and sell it today you would lose (0.10) from holding Austral Gold or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austral Gold vs. Duxton Broadacre Farms
Performance |
| Timeline |
| Austral Gold |
| Duxton Broadacre Farms |
Austral Gold and Duxton Broadacre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austral Gold and Duxton Broadacre
The main advantage of trading using opposite Austral Gold and Duxton Broadacre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austral Gold position performs unexpectedly, Duxton Broadacre 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 Duxton Broadacre will offset losses from the drop in Duxton Broadacre's long position.| Austral Gold vs. Duxton Broadacre Farms | Austral Gold vs. Apiam Animal Health | Austral Gold vs. National Australia Bank | Austral Gold vs. Health and Plant |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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