Correlation Between Aristocrat Leisure and Peel Mining
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Peel Mining 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 Peel Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Peel Mining, you can compare the effects of market volatilities on Aristocrat Leisure and Peel Mining 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 Peel Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Peel Mining.
Diversification Opportunities for Aristocrat Leisure and Peel Mining
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aristocrat and Peel is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Peel Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peel Mining 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 Peel Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peel Mining has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Peel Mining go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Peel Mining
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 1.1 times less return on investment than Peel Mining. But when comparing it to its historical volatility, Aristocrat Leisure is 1.99 times less risky than Peel Mining. It trades about 0.24 of its potential returns per unit of risk. Peel Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Peel Mining on November 7, 2024 and sell it today you would earn a total of 1.00 from holding Peel Mining or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. Peel Mining
Performance |
| Timeline |
| Aristocrat Leisure |
| Peel Mining |
Aristocrat Leisure and Peel Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Peel Mining
The main advantage of trading using opposite Aristocrat Leisure and Peel Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Peel Mining 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 Peel Mining will offset losses from the drop in Peel Mining's long position.| Aristocrat Leisure vs. Event Hospitality and | Aristocrat Leisure vs. Mayfield Childcare | Aristocrat Leisure vs. Navigator Global Investments | Aristocrat Leisure vs. EVE Health Group |
| Peel Mining vs. Black Rock Mining | Peel Mining vs. Metals X | Peel Mining vs. Dalaroo Metals | Peel Mining vs. Norfolk Metals |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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