Correlation Between Challenger and Home Consortium
Can any of the company-specific risk be diversified away by investing in both Challenger and Home Consortium 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 Challenger and Home Consortium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Challenger and Home Consortium, you can compare the effects of market volatilities on Challenger and Home Consortium 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 Challenger with a short position of Home Consortium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Challenger and Home Consortium.
Diversification Opportunities for Challenger and Home Consortium
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Challenger and Home is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Challenger and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium and Challenger 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 Challenger are associated (or correlated) with Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of Challenger i.e., Challenger and Home Consortium go up and down completely randomly.
Pair Corralation between Challenger and Home Consortium
Assuming the 90 days trading horizon Challenger is expected to under-perform the Home Consortium. But the stock apears to be less risky and, when comparing its historical volatility, Challenger is 1.08 times less risky than Home Consortium. The stock trades about -0.01 of its potential returns per unit of risk. The Home Consortium is currently generating about 0.64 of returns per unit of risk over similar time horizon. If you would invest 1,013 in Home Consortium on August 29, 2024 and sell it today you would earn a total of 214.00 from holding Home Consortium or generate 21.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Challenger vs. Home Consortium
Performance |
| Timeline |
| Challenger |
| Home Consortium |
Challenger and Home Consortium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Challenger and Home Consortium
The main advantage of trading using opposite Challenger and Home Consortium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Challenger position performs unexpectedly, Home Consortium 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 Home Consortium will offset losses from the drop in Home Consortium's long position.The idea behind Challenger and Home Consortium pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Home Consortium vs. Scentre Group | Home Consortium vs. Vicinity Centres Re | Home Consortium vs. Charter Hall Retail | Home Consortium vs. Cromwell Property 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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