Correlation Between Aristocrat Leisure and Change Financial
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Change Financial 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 Change Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Change Financial Limited, you can compare the effects of market volatilities on Aristocrat Leisure and Change Financial 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 Change Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Change Financial.
Diversification Opportunities for Aristocrat Leisure and Change Financial
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aristocrat and Change is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Change Financial Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Change Financial 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 Change Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Change Financial has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Change Financial go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Change Financial
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 1.46 times less return on investment than Change Financial. But when comparing it to its historical volatility, Aristocrat Leisure is 3.83 times less risky than Change Financial. It trades about 0.1 of its potential returns per unit of risk. Change Financial Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.10 in Change Financial Limited on October 28, 2024 and sell it today you would earn a total of 2.00 from holding Change Financial Limited or generate 39.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. Change Financial Limited
Performance |
| Timeline |
| Aristocrat Leisure |
| Change Financial |
Aristocrat Leisure and Change Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Change Financial
The main advantage of trading using opposite Aristocrat Leisure and Change Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Change Financial 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 Change Financial will offset losses from the drop in Change Financial's long position.| Aristocrat Leisure vs. Land Homes Group | Aristocrat Leisure vs. Magellan Financial Group | Aristocrat Leisure vs. BSP Financial Group | Aristocrat Leisure vs. Insignia Financial |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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