Correlation Between Aristocrat Leisure and Aeris Environmental
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Aeris Environmental 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 Aeris Environmental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Aeris Environmental, you can compare the effects of market volatilities on Aristocrat Leisure and Aeris Environmental 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 Aeris Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Aeris Environmental.
Diversification Opportunities for Aristocrat Leisure and Aeris Environmental
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aristocrat and Aeris is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Aeris Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeris Environmental 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 Aeris Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeris Environmental has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Aeris Environmental go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Aeris Environmental
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 0.4 times more return on investment than Aeris Environmental. However, Aristocrat Leisure is 2.48 times less risky than Aeris Environmental. It trades about 0.14 of its potential returns per unit of risk. Aeris Environmental is currently generating about -0.06 per unit of risk. If you would invest 6,520 in Aristocrat Leisure on September 12, 2024 and sell it today you would earn a total of 270.00 from holding Aristocrat Leisure or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. Aeris Environmental
Performance |
| Timeline |
| Aristocrat Leisure |
| Aeris Environmental |
Aristocrat Leisure and Aeris Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Aeris Environmental
The main advantage of trading using opposite Aristocrat Leisure and Aeris Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Aeris Environmental 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 Aeris Environmental will offset losses from the drop in Aeris Environmental's long position.| Aristocrat Leisure vs. Aneka Tambang Tbk | Aristocrat Leisure vs. BHP Group Limited | Aristocrat Leisure vs. Commonwealth Bank | Aristocrat Leisure vs. Commonwealth Bank of |
| Aeris Environmental vs. Super Retail Group | Aeris Environmental vs. Medibank Private | Aeris Environmental vs. Charter Hall Education | Aeris Environmental vs. Bank of Queensland |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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