Correlation Between Centuria Industrial and EROAD
Can any of the company-specific risk be diversified away by investing in both Centuria Industrial and EROAD 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 Centuria Industrial and EROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centuria Industrial Reit and EROAD, you can compare the effects of market volatilities on Centuria Industrial and EROAD 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 Centuria Industrial with a short position of EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centuria Industrial and EROAD.
Diversification Opportunities for Centuria Industrial and EROAD
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centuria and EROAD is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Centuria Industrial Reit and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Centuria Industrial 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 Centuria Industrial Reit are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Centuria Industrial i.e., Centuria Industrial and EROAD go up and down completely randomly.
Pair Corralation between Centuria Industrial and EROAD
Assuming the 90 days trading horizon Centuria Industrial Reit is expected to under-perform the EROAD. But the stock apears to be less risky and, when comparing its historical volatility, Centuria Industrial Reit is 3.54 times less risky than EROAD. The stock trades about -0.29 of its potential returns per unit of risk. The EROAD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 85.00 in EROAD on September 3, 2024 and sell it today you would earn a total of 2.00 from holding EROAD or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centuria Industrial Reit vs. EROAD
Performance |
| Timeline |
| Centuria Industrial Reit |
| EROAD |
Centuria Industrial and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centuria Industrial and EROAD
The main advantage of trading using opposite Centuria Industrial and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centuria Industrial position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Centuria Industrial vs. GDI Property Group | Centuria Industrial vs. Champion Iron | Centuria Industrial vs. iShares Global Healthcare | Centuria Industrial vs. Peel Mining |
| EROAD vs. Commonwealth Bank | EROAD vs. Commonwealth Bank of | EROAD vs. Champion Iron | EROAD vs. iShares Global Healthcare |
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 Correlations module to find global opportunities by holding instruments from different markets.
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