Correlation Between Carlton Investments and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Carlton Investments and Aristocrat Leisure 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 Carlton Investments and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlton Investments and Aristocrat Leisure, you can compare the effects of market volatilities on Carlton Investments and Aristocrat Leisure 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 Carlton Investments with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlton Investments and Aristocrat Leisure.
Diversification Opportunities for Carlton Investments and Aristocrat Leisure
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carlton and Aristocrat is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and Carlton Investments 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 Carlton Investments are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of Carlton Investments i.e., Carlton Investments and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Carlton Investments and Aristocrat Leisure
Assuming the 90 days trading horizon Carlton Investments is expected to generate 8.65 times less return on investment than Aristocrat Leisure. But when comparing it to its historical volatility, Carlton Investments is 1.62 times less risky than Aristocrat Leisure. It trades about 0.05 of its potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,499 in Aristocrat Leisure on September 1, 2024 and sell it today you would earn a total of 2,276 from holding Aristocrat Leisure or generate 50.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlton Investments vs. Aristocrat Leisure
Performance |
| Timeline |
| Carlton Investments |
| Aristocrat Leisure |
Carlton Investments and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlton Investments and Aristocrat Leisure
The main advantage of trading using opposite Carlton Investments and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlton Investments position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| Carlton Investments vs. GQG Partners DRC | Carlton Investments vs. MFF Capital Investments | Carlton Investments vs. Metrics Master Income | Carlton Investments vs. L1 Long Short |
| Aristocrat Leisure vs. iShares Global Healthcare | Aristocrat Leisure vs. Australian Dairy Farms | Aristocrat Leisure vs. Adriatic Metals Plc | Aristocrat Leisure vs. Australian Agricultural |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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