Correlation Between Australian United and Kip McGrath
Can any of the company-specific risk be diversified away by investing in both Australian United and Kip McGrath 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 Australian United and Kip McGrath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian United Investment and Kip McGrath Education, you can compare the effects of market volatilities on Australian United and Kip McGrath 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 Australian United with a short position of Kip McGrath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian United and Kip McGrath.
Diversification Opportunities for Australian United and Kip McGrath
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Australian and Kip is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education and Australian United 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 Australian United Investment are associated (or correlated) with Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Australian United i.e., Australian United and Kip McGrath go up and down completely randomly.
Pair Corralation between Australian United and Kip McGrath
Assuming the 90 days trading horizon Australian United Investment is expected to under-perform the Kip McGrath. But the stock apears to be less risky and, when comparing its historical volatility, Australian United Investment is 3.0 times less risky than Kip McGrath. The stock trades about -0.23 of its potential returns per unit of risk. The Kip McGrath Education is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 41.00 in Kip McGrath Education on September 15, 2024 and sell it today you would earn a total of 8.00 from holding Kip McGrath Education or generate 19.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian United Investment vs. Kip McGrath Education
Performance |
| Timeline |
| Australian United |
| Kip McGrath Education |
Australian United and Kip McGrath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian United and Kip McGrath
The main advantage of trading using opposite Australian United and Kip McGrath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian United position performs unexpectedly, Kip McGrath 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 Kip McGrath will offset losses from the drop in Kip McGrath's long position.| Australian United vs. Australian Foundation Investment | Australian United vs. MFF Capital Investments | Australian United vs. Metrics Master Income | Australian United vs. L1 Long Short |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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