Correlation Between Aristocrat Leisure and Bluescope Steel
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Bluescope Steel 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 Bluescope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Bluescope Steel, you can compare the effects of market volatilities on Aristocrat Leisure and Bluescope Steel 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 Bluescope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Bluescope Steel.
Diversification Opportunities for Aristocrat Leisure and Bluescope Steel
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aristocrat and Bluescope is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Bluescope Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluescope Steel 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 Bluescope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluescope Steel has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Bluescope Steel go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Bluescope Steel
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 2.47 times less return on investment than Bluescope Steel. In addition to that, Aristocrat Leisure is 1.39 times more volatile than Bluescope Steel. It trades about 0.13 of its total potential returns per unit of risk. Bluescope Steel is currently generating about 0.46 per unit of volatility. If you would invest 1,899 in Bluescope Steel on November 6, 2024 and sell it today you would earn a total of 230.00 from holding Bluescope Steel or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aristocrat Leisure vs. Bluescope Steel
Performance |
| Timeline |
| Aristocrat Leisure |
| Bluescope Steel |
Aristocrat Leisure and Bluescope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Bluescope Steel
The main advantage of trading using opposite Aristocrat Leisure and Bluescope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Bluescope Steel 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 Bluescope Steel will offset losses from the drop in Bluescope Steel's long position.| Aristocrat Leisure vs. Centaurus Metals | Aristocrat Leisure vs. Beston Global Food | Aristocrat Leisure vs. Cleanaway Waste Management | Aristocrat Leisure vs. Aurelia Metals |
| Bluescope Steel vs. Neurotech International | Bluescope Steel vs. Complii FinTech Solutions | Bluescope Steel vs. Iron Road | Bluescope Steel vs. Readytech Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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