Correlation Between Aristocrat Leisure and Carnegie Clean
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Carnegie Clean 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 Carnegie Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Carnegie Clean Energy, you can compare the effects of market volatilities on Aristocrat Leisure and Carnegie Clean 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 Carnegie Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Carnegie Clean.
Diversification Opportunities for Aristocrat Leisure and Carnegie Clean
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aristocrat and Carnegie is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Carnegie Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnegie Clean Energy 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 Carnegie Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnegie Clean Energy has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Carnegie Clean go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Carnegie Clean
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 0.42 times more return on investment than Carnegie Clean. However, Aristocrat Leisure is 2.38 times less risky than Carnegie Clean. It trades about 0.27 of its potential returns per unit of risk. Carnegie Clean Energy is currently generating about 0.03 per unit of risk. If you would invest 5,371 in Aristocrat Leisure on August 25, 2024 and sell it today you would earn a total of 1,278 from holding Aristocrat Leisure or generate 23.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.48% |
| Values | Daily Returns |
Aristocrat Leisure vs. Carnegie Clean Energy
Performance |
| Timeline |
| Aristocrat Leisure |
| Carnegie Clean Energy |
Aristocrat Leisure and Carnegie Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Carnegie Clean
The main advantage of trading using opposite Aristocrat Leisure and Carnegie Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Carnegie Clean 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 Carnegie Clean will offset losses from the drop in Carnegie Clean's long position.| Aristocrat Leisure vs. Summit Resources Limited | Aristocrat Leisure vs. Ecofibre | Aristocrat Leisure vs. iShares Global Healthcare | Aristocrat Leisure vs. Adriatic Metals Plc |
| Carnegie Clean vs. Aeon Metals | Carnegie Clean vs. Patriot Battery Metals | Carnegie Clean vs. Aussie Broadband | Carnegie Clean vs. Bio Gene Technology |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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