Correlation Between Aristocrat Leisure and Harvey Norman
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Harvey Norman 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 Harvey Norman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Harvey Norman Holdings, you can compare the effects of market volatilities on Aristocrat Leisure and Harvey Norman 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 Harvey Norman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Harvey Norman.
Diversification Opportunities for Aristocrat Leisure and Harvey Norman
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aristocrat and Harvey is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Harvey Norman Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvey Norman Holdings 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 Harvey Norman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvey Norman Holdings has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Harvey Norman go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Harvey Norman
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 1.09 times more return on investment than Harvey Norman. However, Aristocrat Leisure is 1.09 times more volatile than Harvey Norman Holdings. It trades about 0.13 of its potential returns per unit of risk. Harvey Norman Holdings is currently generating about 0.06 per unit of risk. If you would invest 4,526 in Aristocrat Leisure on December 4, 2024 and sell it today you would earn a total of 2,817 from holding Aristocrat Leisure or generate 62.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aristocrat Leisure vs. Harvey Norman Holdings
Performance |
| Timeline |
| Aristocrat Leisure |
| Harvey Norman Holdings |
Aristocrat Leisure and Harvey Norman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Harvey Norman
The main advantage of trading using opposite Aristocrat Leisure and Harvey Norman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Harvey Norman 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 Harvey Norman will offset losses from the drop in Harvey Norman's long position.| Aristocrat Leisure vs. Aspire Mining | Aristocrat Leisure vs. Globe Metals Mining | Aristocrat Leisure vs. Andean Silver Limited | Aristocrat Leisure vs. Aurelia Metals |
| Harvey Norman vs. Audio Pixels Holdings | Harvey Norman vs. Iodm | Harvey Norman vs. Parkd | Harvey Norman vs. Nsx |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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