Correlation Between Aristocrat Leisure and Regis Healthcare
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Regis Healthcare 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 Regis Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Regis Healthcare, you can compare the effects of market volatilities on Aristocrat Leisure and Regis Healthcare 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 Regis Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Regis Healthcare.
Diversification Opportunities for Aristocrat Leisure and Regis Healthcare
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aristocrat and Regis is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Regis Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Healthcare 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 Regis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Healthcare has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Regis Healthcare go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Regis Healthcare
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 0.58 times more return on investment than Regis Healthcare. However, Aristocrat Leisure is 1.71 times less risky than Regis Healthcare. It trades about 0.09 of its potential returns per unit of risk. Regis Healthcare is currently generating about 0.04 per unit of risk. If you would invest 6,676 in Aristocrat Leisure on September 15, 2024 and sell it today you would earn a total of 162.00 from holding Aristocrat Leisure or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. Regis Healthcare
Performance |
| Timeline |
| Aristocrat Leisure |
| Regis Healthcare |
Aristocrat Leisure and Regis Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Regis Healthcare
The main advantage of trading using opposite Aristocrat Leisure and Regis Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Regis Healthcare 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 Regis Healthcare will offset losses from the drop in Regis Healthcare's long position.| Aristocrat Leisure vs. Lendlease Group | Aristocrat Leisure vs. Carlton Investments | Aristocrat Leisure vs. MFF Capital Investments | Aristocrat Leisure vs. Super Retail Group |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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