Correlation Between Collins Foods and Viva Leisure
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Viva 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 Collins Foods and Viva Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Viva Leisure, you can compare the effects of market volatilities on Collins Foods and Viva 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 Collins Foods with a short position of Viva Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Viva Leisure.
Diversification Opportunities for Collins Foods and Viva Leisure
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Collins and Viva is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Viva Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viva Leisure 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 Viva Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viva Leisure has no effect on the direction of Collins Foods i.e., Collins Foods and Viva Leisure go up and down completely randomly.
Pair Corralation between Collins Foods and Viva Leisure
Assuming the 90 days trading horizon Collins Foods is expected to generate 11.86 times less return on investment than Viva Leisure. But when comparing it to its historical volatility, Collins Foods is 3.2 times less risky than Viva Leisure. It trades about 0.02 of its potential returns per unit of risk. Viva Leisure is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 135.00 in Viva Leisure on August 24, 2024 and sell it today you would earn a total of 4.00 from holding Viva Leisure or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Viva Leisure
Performance |
| Timeline |
| Collins Foods |
| Viva Leisure |
Collins Foods and Viva Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Viva Leisure
The main advantage of trading using opposite Collins Foods and Viva Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Viva 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 Viva Leisure will offset losses from the drop in Viva Leisure's long position.| Collins Foods vs. Charter Hall Retail | Collins Foods vs. National Australia Bank | Collins Foods vs. Finexia Financial Group | Collins Foods vs. Pioneer Credit |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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