Correlation Between Aristocrat Leisure and Cleanaway Waste
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Cleanaway Waste 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 Cleanaway Waste into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Cleanaway Waste Management, you can compare the effects of market volatilities on Aristocrat Leisure and Cleanaway Waste 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 Cleanaway Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Cleanaway Waste.
Diversification Opportunities for Aristocrat Leisure and Cleanaway Waste
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aristocrat and Cleanaway is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Cleanaway Waste go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Cleanaway Waste
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 2.17 times more return on investment than Cleanaway Waste. However, Aristocrat Leisure is 2.17 times more volatile than Cleanaway Waste Management. It trades about 0.13 of its potential returns per unit of risk. Cleanaway Waste Management is currently generating about 0.0 per unit of risk. If you would invest 7,156 in Aristocrat Leisure on November 9, 2024 and sell it today you would earn a total of 325.00 from holding Aristocrat Leisure or generate 4.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. Cleanaway Waste Management
Performance |
| Timeline |
| Aristocrat Leisure |
| Cleanaway Waste Mana |
Aristocrat Leisure and Cleanaway Waste Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Cleanaway Waste
The main advantage of trading using opposite Aristocrat Leisure and Cleanaway Waste positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Cleanaway Waste 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 Cleanaway Waste will offset losses from the drop in Cleanaway Waste's long position.| Aristocrat Leisure vs. Global Health | Aristocrat Leisure vs. Ramsay Health Care | Aristocrat Leisure vs. Vitura Health Limited | Aristocrat Leisure vs. Sky Metals |
| Cleanaway Waste vs. Aneka Tambang Tbk | Cleanaway Waste vs. BHP Group Limited | Cleanaway Waste vs. Rio Tinto | Cleanaway Waste vs. Macquarie Group Ltd |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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