Correlation Between Coles and Event Hospitality
Can any of the company-specific risk be diversified away by investing in both Coles and Event Hospitality 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 Event Hospitality into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coles Group and Event Hospitality and, you can compare the effects of market volatilities on Coles and Event Hospitality 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 Event Hospitality. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coles and Event Hospitality.
Diversification Opportunities for Coles and Event Hospitality
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coles and Event is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Coles Group and Event Hospitality and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Event Hospitality 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 Event Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Event Hospitality has no effect on the direction of Coles i.e., Coles and Event Hospitality go up and down completely randomly.
Pair Corralation between Coles and Event Hospitality
Assuming the 90 days trading horizon Coles Group is expected to generate 0.76 times more return on investment than Event Hospitality. However, Coles Group is 1.31 times less risky than Event Hospitality. It trades about 0.31 of its potential returns per unit of risk. Event Hospitality and is currently generating about 0.2 per unit of risk. If you would invest 1,759 in Coles Group on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Coles Group or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Coles Group vs. Event Hospitality and
Performance |
| Timeline |
| Coles Group |
| Event Hospitality |
Coles and Event Hospitality Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coles and Event Hospitality
The main advantage of trading using opposite Coles and Event Hospitality positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coles position performs unexpectedly, Event Hospitality 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 Event Hospitality will offset losses from the drop in Event Hospitality's long position.The idea behind Coles Group and Event Hospitality and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Event Hospitality vs. iShares Global Healthcare | Event Hospitality vs. Australian Dairy Farms | Event Hospitality vs. Adriatic Metals Plc | Event Hospitality 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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