Correlation Between Aristocrat Leisure and Good Gaming
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Good Gaming 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 Good Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure Limited and Good Gaming, you can compare the effects of market volatilities on Aristocrat Leisure and Good Gaming 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 Good Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Good Gaming.
Diversification Opportunities for Aristocrat Leisure and Good Gaming
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aristocrat and Good is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure Limited and Good Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Gaming 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 Limited are associated (or correlated) with Good Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Gaming has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Good Gaming go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Good Gaming
Assuming the 90 days horizon Aristocrat Leisure Limited is expected to generate 0.35 times more return on investment than Good Gaming. However, Aristocrat Leisure Limited is 2.87 times less risky than Good Gaming. It trades about 0.08 of its potential returns per unit of risk. Good Gaming is currently generating about 0.02 per unit of risk. If you would invest 2,442 in Aristocrat Leisure Limited on August 31, 2024 and sell it today you would earn a total of 1,737 from holding Aristocrat Leisure Limited or generate 71.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.01% |
| Values | Daily Returns |
Aristocrat Leisure Limited vs. Good Gaming
Performance |
| Timeline |
| Aristocrat Leisure |
| Good Gaming |
Aristocrat Leisure and Good Gaming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Good Gaming
The main advantage of trading using opposite Aristocrat Leisure and Good Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Good Gaming 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 Good Gaming will offset losses from the drop in Good Gaming's long position.| Aristocrat Leisure vs. Amadeus IT Group | Aristocrat Leisure vs. LAir Liquide SA | Aristocrat Leisure vs. ASSA ABLOY AB | Aristocrat Leisure vs. Relx PLC |
| Good Gaming vs. Intema Solutions | Good Gaming vs. 888 Holdings | Good Gaming vs. Royal Wins | Good Gaming vs. Real Luck Group |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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