Correlation Between Australian Agricultural and Cross Country
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Cross Country 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 Agricultural and Cross Country into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Cross Country Healthcare, you can compare the effects of market volatilities on Australian Agricultural and Cross Country 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 Agricultural with a short position of Cross Country. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Cross Country.
Diversification Opportunities for Australian Agricultural and Cross Country
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Australian and Cross is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Cross Country Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cross Country Healthcare and Australian Agricultural 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 Agricultural are associated (or correlated) with Cross Country. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cross Country Healthcare has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Cross Country go up and down completely randomly.
Pair Corralation between Australian Agricultural and Cross Country
Assuming the 90 days horizon Australian Agricultural is expected to generate 4.99 times less return on investment than Cross Country. But when comparing it to its historical volatility, Australian Agricultural is 2.28 times less risky than Cross Country. It trades about 0.04 of its potential returns per unit of risk. Cross Country Healthcare is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,020 in Cross Country Healthcare on September 4, 2024 and sell it today you would earn a total of 60.00 from holding Cross Country Healthcare or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Cross Country Healthcare
Performance |
| Timeline |
| Australian Agricultural |
| Cross Country Healthcare |
Australian Agricultural and Cross Country Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Cross Country
The main advantage of trading using opposite Australian Agricultural and Cross Country positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Cross Country 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 Cross Country will offset losses from the drop in Cross Country's long position.| Australian Agricultural vs. Archer Daniels Midland | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. Wilmar International Limited | Australian Agricultural vs. SalMar ASA |
| Cross Country vs. WisdomTree Investments | Cross Country vs. Australian Agricultural | Cross Country vs. AGRICULTBK HADR25 YC | Cross Country vs. Japan Asia Investment |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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