Correlation Between Coles and Alternative Investment
Can any of the company-specific risk be diversified away by investing in both Coles and Alternative Investment 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 Coles and Alternative Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coles Group and Alternative Investment Trust, you can compare the effects of market volatilities on Coles and Alternative Investment 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 Coles with a short position of Alternative Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coles and Alternative Investment.
Diversification Opportunities for Coles and Alternative Investment
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coles and Alternative is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Coles Group and Alternative Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment and Coles 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 Coles Group are associated (or correlated) with Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of Coles i.e., Coles and Alternative Investment go up and down completely randomly.
Pair Corralation between Coles and Alternative Investment
Assuming the 90 days trading horizon Coles Group is expected to generate 5.49 times more return on investment than Alternative Investment. However, Coles is 5.49 times more volatile than Alternative Investment Trust. It trades about 0.45 of its potential returns per unit of risk. Alternative Investment Trust is currently generating about -0.22 per unit of risk. If you would invest 1,752 in Coles Group on September 4, 2024 and sell it today you would earn a total of 148.00 from holding Coles Group or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Coles Group vs. Alternative Investment Trust
Performance |
| Timeline |
| Coles Group |
| Alternative Investment |
Coles and Alternative Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coles and Alternative Investment
The main advantage of trading using opposite Coles and Alternative Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coles position performs unexpectedly, Alternative Investment 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 Alternative Investment will offset losses from the drop in Alternative Investment's long position.| Coles vs. Alternative Investment Trust | Coles vs. Charter Hall Retail | Coles vs. Sandon Capital Investments | Coles vs. Flagship Investments |
| Alternative Investment vs. Westpac Banking | Alternative Investment vs. Ecofibre | Alternative Investment vs. Adriatic Metals Plc | Alternative Investment vs. Australian Dairy Farms |
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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