Correlation Between Australian Dairy and Global Data
Can any of the company-specific risk be diversified away by investing in both Australian Dairy and Global Data 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 Global Data 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 Global Data Centre, you can compare the effects of market volatilities on Australian Dairy and Global Data 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 Global Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Dairy and Global Data.
Diversification Opportunities for Australian Dairy and Global Data
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Australian and Global is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Australian Dairy Farms and Global Data Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Data Centre 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 Global Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Data Centre has no effect on the direction of Australian Dairy i.e., Australian Dairy and Global Data go up and down completely randomly.
Pair Corralation between Australian Dairy and Global Data
Assuming the 90 days trading horizon Australian Dairy is expected to generate 1.36 times less return on investment than Global Data. In addition to that, Australian Dairy is 1.43 times more volatile than Global Data Centre. It trades about 0.03 of its total potential returns per unit of risk. Global Data Centre is currently generating about 0.05 per unit of volatility. If you would invest 81.00 in Global Data Centre on September 12, 2024 and sell it today you would earn a total of 62.00 from holding Global Data Centre or generate 76.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Dairy Farms vs. Global Data Centre
Performance |
| Timeline |
| Australian Dairy Farms |
| Global Data Centre |
Australian Dairy and Global Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Dairy and Global Data
The main advantage of trading using opposite Australian Dairy and Global Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Dairy position performs unexpectedly, Global Data 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 Global Data will offset losses from the drop in Global Data's long position.| Australian Dairy vs. Group 6 Metals | Australian Dairy vs. Richmond Vanadium Technology | Australian Dairy vs. DY6 Metals | Australian Dairy vs. Strickland Metals |
| Global Data vs. Perseus Mining | Global Data vs. K2 Asset Management | Global Data vs. Alto Metals | Global Data vs. Argo Investments |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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