Correlation Between COAST ENTERTAINMENT and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both COAST ENTERTAINMENT and Mayfield Childcare 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 COAST ENTERTAINMENT and Mayfield Childcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COAST ENTERTAINMENT HOLDINGS and Mayfield Childcare, you can compare the effects of market volatilities on COAST ENTERTAINMENT and Mayfield Childcare 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 COAST ENTERTAINMENT with a short position of Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of COAST ENTERTAINMENT and Mayfield Childcare.
Diversification Opportunities for COAST ENTERTAINMENT and Mayfield Childcare
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between COAST and Mayfield is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding COAST ENTERTAINMENT HOLDINGS and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare and COAST ENTERTAINMENT 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 COAST ENTERTAINMENT HOLDINGS are associated (or correlated) with Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of COAST ENTERTAINMENT i.e., COAST ENTERTAINMENT and Mayfield Childcare go up and down completely randomly.
Pair Corralation between COAST ENTERTAINMENT and Mayfield Childcare
Assuming the 90 days trading horizon COAST ENTERTAINMENT HOLDINGS is expected to under-perform the Mayfield Childcare. In addition to that, COAST ENTERTAINMENT is 1.17 times more volatile than Mayfield Childcare. It trades about -0.1 of its total potential returns per unit of risk. Mayfield Childcare is currently generating about 0.06 per unit of volatility. If you would invest 53.00 in Mayfield Childcare on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Mayfield Childcare or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COAST ENTERTAINMENT HOLDINGS vs. Mayfield Childcare
Performance |
| Timeline |
| COAST ENTERTAINMENT |
| Mayfield Childcare |
COAST ENTERTAINMENT and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COAST ENTERTAINMENT and Mayfield Childcare
The main advantage of trading using opposite COAST ENTERTAINMENT and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COAST ENTERTAINMENT position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| COAST ENTERTAINMENT vs. Pinnacle Investment Management | COAST ENTERTAINMENT vs. Retail Food Group | COAST ENTERTAINMENT vs. Charter Hall Retail | COAST ENTERTAINMENT vs. Aussie Broadband |
| Mayfield Childcare vs. Iron Road | Mayfield Childcare vs. Homeco Daily Needs | Mayfield Childcare vs. Premier Investments | Mayfield Childcare vs. Flagship 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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