Correlation Between Aristocrat Leisure and Clime Investment
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Clime Investment 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 Clime Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Clime Investment Management, you can compare the effects of market volatilities on Aristocrat Leisure and Clime Investment 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 Clime Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Clime Investment.
Diversification Opportunities for Aristocrat Leisure and Clime Investment
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aristocrat and Clime is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Clime Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clime Investment Man 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 Clime Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clime Investment Man has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Clime Investment go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Clime Investment
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 0.62 times more return on investment than Clime Investment. However, Aristocrat Leisure is 1.6 times less risky than Clime Investment. It trades about 0.12 of its potential returns per unit of risk. Clime Investment Management is currently generating about 0.0 per unit of risk. If you would invest 3,669 in Aristocrat Leisure on August 31, 2024 and sell it today you would earn a total of 3,106 from holding Aristocrat Leisure or generate 84.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Aristocrat Leisure vs. Clime Investment Management
Performance |
| Timeline |
| Aristocrat Leisure |
| Clime Investment Man |
Aristocrat Leisure and Clime Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Clime Investment
The main advantage of trading using opposite Aristocrat Leisure and Clime Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Clime Investment 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 Clime Investment will offset losses from the drop in Clime Investment's long position.| Aristocrat Leisure vs. Microequities Asset Management | Aristocrat Leisure vs. Super Retail Group | Aristocrat Leisure vs. Iron Road | Aristocrat Leisure vs. Vulcan Steel |
| Clime Investment vs. Magellan Financial Group | Clime Investment vs. Wt Financial Group | Clime Investment vs. Qbe Insurance Group | Clime Investment vs. Spirit Telecom |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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