Correlation Between Champion Iron and Super Retail
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Super Retail 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 Champion Iron and Super Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Super Retail Group, you can compare the effects of market volatilities on Champion Iron and Super Retail 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 Champion Iron with a short position of Super Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Super Retail.
Diversification Opportunities for Champion Iron and Super Retail
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Champion and Super is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Super Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Retail Group and Champion Iron 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 Champion Iron are associated (or correlated) with Super Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Retail Group has no effect on the direction of Champion Iron i.e., Champion Iron and Super Retail go up and down completely randomly.
Pair Corralation between Champion Iron and Super Retail
Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Super Retail. In addition to that, Champion Iron is 1.39 times more volatile than Super Retail Group. It trades about -0.01 of its total potential returns per unit of risk. Super Retail Group is currently generating about 0.0 per unit of volatility. If you would invest 1,510 in Super Retail Group on September 3, 2024 and sell it today you would lose (37.00) from holding Super Retail Group or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Super Retail Group
Performance |
| Timeline |
| Champion Iron |
| Super Retail Group |
Champion Iron and Super Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Super Retail
The main advantage of trading using opposite Champion Iron and Super Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Super Retail 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 Super Retail will offset losses from the drop in Super Retail's long position.| Champion Iron vs. Northern Star Resources | Champion Iron vs. Evolution Mining | Champion Iron vs. Bluescope Steel | Champion Iron vs. Aneka Tambang Tbk |
| Super Retail vs. Westpac Banking | Super Retail vs. Champion Iron | Super Retail vs. iShares Global Healthcare | Super Retail vs. Peel Mining |
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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