Correlation Between Aristocrat Leisure and Autosports
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Autosports 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 Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Autosports Group, you can compare the effects of market volatilities on Aristocrat Leisure and Autosports 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 Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Autosports.
Diversification Opportunities for Aristocrat Leisure and Autosports
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aristocrat and Autosports is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group 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 Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Autosports go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Autosports
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 0.8 times more return on investment than Autosports. However, Aristocrat Leisure is 1.25 times less risky than Autosports. It trades about 0.49 of its potential returns per unit of risk. Autosports Group is currently generating about -0.71 per unit of risk. If you would invest 5,978 in Aristocrat Leisure on August 29, 2024 and sell it today you would earn a total of 792.00 from holding Aristocrat Leisure or generate 13.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Aristocrat Leisure vs. Autosports Group
Performance |
Timeline |
Aristocrat Leisure |
Autosports Group |
Aristocrat Leisure and Autosports Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aristocrat Leisure and Autosports
The main advantage of trading using opposite Aristocrat Leisure and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.Aristocrat Leisure vs. Summit Resources Limited | Aristocrat Leisure vs. Champion Iron | Aristocrat Leisure vs. Ridley | Aristocrat Leisure vs. Peel Mining |
Autosports vs. Summit Resources Limited | Autosports vs. Champion Iron | Autosports vs. Ridley | Autosports vs. Peel Mining |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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