Correlation Between Aristocrat Leisure and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Southern Cross 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 Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Southern Cross Gold, you can compare the effects of market volatilities on Aristocrat Leisure and Southern Cross 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 Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Southern Cross.
Diversification Opportunities for Aristocrat Leisure and Southern Cross
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aristocrat and Southern is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold 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 Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Gold has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Southern Cross go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Southern Cross
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 2.62 times less return on investment than Southern Cross. But when comparing it to its historical volatility, Aristocrat Leisure is 3.91 times less risky than Southern Cross. It trades about 0.12 of its potential returns per unit of risk. Southern Cross Gold is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 74.00 in Southern Cross Gold on September 12, 2024 and sell it today you would earn a total of 273.00 from holding Southern Cross Gold or generate 368.92% 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. Southern Cross Gold
Performance |
| Timeline |
| Aristocrat Leisure |
| Southern Cross Gold |
Aristocrat Leisure and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Southern Cross
The main advantage of trading using opposite Aristocrat Leisure and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.| Aristocrat Leisure vs. Aneka Tambang Tbk | Aristocrat Leisure vs. BHP Group Limited | Aristocrat Leisure vs. Commonwealth Bank | Aristocrat Leisure vs. Commonwealth Bank of |
| Southern Cross vs. Farm Pride Foods | Southern Cross vs. Iron Road | Southern Cross vs. Bluescope Steel | Southern Cross vs. Spirit Telecom |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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