Correlation Between Aristocrat Leisure and Centaurus Metals
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Centaurus Metals 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 Centaurus Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Centaurus Metals, you can compare the effects of market volatilities on Aristocrat Leisure and Centaurus Metals 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 Centaurus Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Centaurus Metals.
Diversification Opportunities for Aristocrat Leisure and Centaurus Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aristocrat and Centaurus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Centaurus Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaurus Metals 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 Centaurus Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaurus Metals has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Centaurus Metals go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Centaurus Metals
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 0.33 times more return on investment than Centaurus Metals. However, Aristocrat Leisure is 3.0 times less risky than Centaurus Metals. It trades about 0.43 of its potential returns per unit of risk. Centaurus Metals is currently generating about -0.08 per unit of risk. If you would invest 6,114 in Aristocrat Leisure on September 1, 2024 and sell it today you would earn a total of 661.00 from holding Aristocrat Leisure or generate 10.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. Centaurus Metals
Performance |
| Timeline |
| Aristocrat Leisure |
| Centaurus Metals |
Aristocrat Leisure and Centaurus Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Centaurus Metals
The main advantage of trading using opposite Aristocrat Leisure and Centaurus Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Centaurus Metals 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 Centaurus Metals will offset losses from the drop in Centaurus Metals' long position.| Aristocrat Leisure vs. iShares Global Healthcare | Aristocrat Leisure vs. Australian Dairy Farms | Aristocrat Leisure vs. Adriatic Metals Plc | Aristocrat Leisure vs. Australian Agricultural |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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