Correlation Between Credit Corp and Resource Base
Can any of the company-specific risk be diversified away by investing in both Credit Corp and Resource Base 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 Credit Corp and Resource Base into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Corp Group and Resource Base, you can compare the effects of market volatilities on Credit Corp and Resource Base 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 Credit Corp with a short position of Resource Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Corp and Resource Base.
Diversification Opportunities for Credit Corp and Resource Base
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Credit and Resource is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Credit Corp Group and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base and Credit Corp 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 Credit Corp Group are associated (or correlated) with Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of Credit Corp i.e., Credit Corp and Resource Base go up and down completely randomly.
Pair Corralation between Credit Corp and Resource Base
Assuming the 90 days trading horizon Credit Corp Group is expected to generate 0.51 times more return on investment than Resource Base. However, Credit Corp Group is 1.94 times less risky than Resource Base. It trades about 0.0 of its potential returns per unit of risk. Resource Base is currently generating about -0.03 per unit of risk. If you would invest 1,863 in Credit Corp Group on November 28, 2024 and sell it today you would lose (285.00) from holding Credit Corp Group or give up 15.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Credit Corp Group vs. Resource Base
Performance |
| Timeline |
| Credit Corp Group |
| Resource Base |
Credit Corp and Resource Base Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Corp and Resource Base
The main advantage of trading using opposite Credit Corp and Resource Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Corp position performs unexpectedly, Resource Base 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 Resource Base will offset losses from the drop in Resource Base's long position.| Credit Corp vs. Westpac Banking | Credit Corp vs. TPG Telecom | Credit Corp vs. Computershare | Credit Corp vs. Treasury Wine Estates |
| Resource Base vs. Diversified United Investment | Resource Base vs. Auctus Alternative Investments | Resource Base vs. MFF Capital Investments | Resource Base vs. Mirrabooka Investments |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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