Correlation Between Collins Foods and Dexus Convenience
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Dexus Convenience 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 Collins Foods and Dexus Convenience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Dexus Convenience Retail, you can compare the effects of market volatilities on Collins Foods and Dexus Convenience 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 Collins Foods with a short position of Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Dexus Convenience.
Diversification Opportunities for Collins Foods and Dexus Convenience
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collins and Dexus is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Dexus Convenience Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Convenience Retail and Collins Foods 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 Collins Foods are associated (or correlated) with Dexus Convenience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Convenience Retail has no effect on the direction of Collins Foods i.e., Collins Foods and Dexus Convenience go up and down completely randomly.
Pair Corralation between Collins Foods and Dexus Convenience
Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Dexus Convenience. In addition to that, Collins Foods is 1.44 times more volatile than Dexus Convenience Retail. It trades about -0.08 of its total potential returns per unit of risk. Dexus Convenience Retail is currently generating about 0.05 per unit of volatility. If you would invest 249.00 in Dexus Convenience Retail on September 14, 2024 and sell it today you would earn a total of 39.00 from holding Dexus Convenience Retail or generate 15.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Dexus Convenience Retail
Performance |
| Timeline |
| Collins Foods |
| Dexus Convenience Retail |
Collins Foods and Dexus Convenience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Dexus Convenience
The main advantage of trading using opposite Collins Foods and Dexus Convenience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Dexus Convenience 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 Dexus Convenience will offset losses from the drop in Dexus Convenience's long position.| Collins Foods vs. Tombador Iron | Collins Foods vs. Cleanaway Waste Management | Collins Foods vs. Farm Pride Foods | Collins Foods vs. RLF AgTech |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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