Correlation Between Aristocrat Leisure and Worley
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Worley 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 Worley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Worley, you can compare the effects of market volatilities on Aristocrat Leisure and Worley 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 Worley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Worley.
Diversification Opportunities for Aristocrat Leisure and Worley
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aristocrat and Worley is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Worley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worley 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 Worley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worley has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Worley go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Worley
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 1.04 times more return on investment than Worley. However, Aristocrat Leisure is 1.04 times more volatile than Worley. It trades about 0.12 of its potential returns per unit of risk. Worley is currently generating about -0.02 per unit of risk. If you would invest 3,780 in Aristocrat Leisure on September 4, 2024 and sell it today you would earn a total of 3,039 from holding Aristocrat Leisure or generate 80.4% 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. Worley
Performance |
| Timeline |
| Aristocrat Leisure |
| Worley |
Aristocrat Leisure and Worley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Worley
The main advantage of trading using opposite Aristocrat Leisure and Worley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Worley 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 Worley will offset losses from the drop in Worley's long position.| Aristocrat Leisure vs. Aneka Tambang Tbk | Aristocrat Leisure vs. BHP Group Limited | Aristocrat Leisure vs. Commonwealth Bank of | Aristocrat Leisure vs. Commonwealth Bank of |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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