Correlation Between Australian Dairy and VanEck 1
Can any of the company-specific risk be diversified away by investing in both Australian Dairy and VanEck 1 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 Australian Dairy and VanEck 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Dairy Farms and VanEck 1 5 Year, you can compare the effects of market volatilities on Australian Dairy and VanEck 1 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 Australian Dairy with a short position of VanEck 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Dairy and VanEck 1.
Diversification Opportunities for Australian Dairy and VanEck 1
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and VanEck is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Australian Dairy Farms and VanEck 1 5 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck 1 5 and Australian Dairy 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 Australian Dairy Farms are associated (or correlated) with VanEck 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck 1 5 has no effect on the direction of Australian Dairy i.e., Australian Dairy and VanEck 1 go up and down completely randomly.
Pair Corralation between Australian Dairy and VanEck 1
Assuming the 90 days trading horizon Australian Dairy Farms is expected to generate 52.66 times more return on investment than VanEck 1. However, Australian Dairy is 52.66 times more volatile than VanEck 1 5 Year. It trades about 0.44 of its potential returns per unit of risk. VanEck 1 5 Year is currently generating about 0.2 per unit of risk. If you would invest 2.30 in Australian Dairy Farms on September 3, 2024 and sell it today you would earn a total of 1.50 from holding Australian Dairy Farms or generate 65.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Dairy Farms vs. VanEck 1 5 Year
Performance |
| Timeline |
| Australian Dairy Farms |
| VanEck 1 5 |
Australian Dairy and VanEck 1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Dairy and VanEck 1
The main advantage of trading using opposite Australian Dairy and VanEck 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Dairy position performs unexpectedly, VanEck 1 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 VanEck 1 will offset losses from the drop in VanEck 1's long position.| Australian Dairy vs. Cooper Metals | Australian Dairy vs. OD6 Metals | Australian Dairy vs. SportsHero | Australian Dairy vs. Champion Iron |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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