Correlation Between Charter Hall and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Mayfield Childcare 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 Charter Hall and Mayfield Childcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Education and Mayfield Childcare, you can compare the effects of market volatilities on Charter Hall and Mayfield Childcare 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 Charter Hall with a short position of Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Mayfield Childcare.
Diversification Opportunities for Charter Hall and Mayfield Childcare
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charter and Mayfield is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare and Charter Hall 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 Charter Hall Education are associated (or correlated) with Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of Charter Hall i.e., Charter Hall and Mayfield Childcare go up and down completely randomly.
Pair Corralation between Charter Hall and Mayfield Childcare
Assuming the 90 days trading horizon Charter Hall Education is expected to generate 0.65 times more return on investment than Mayfield Childcare. However, Charter Hall Education is 1.54 times less risky than Mayfield Childcare. It trades about 0.03 of its potential returns per unit of risk. Mayfield Childcare is currently generating about -0.02 per unit of risk. If you would invest 248.00 in Charter Hall Education on August 25, 2024 and sell it today you would earn a total of 18.00 from holding Charter Hall Education or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Education vs. Mayfield Childcare
Performance |
| Timeline |
| Charter Hall Education |
| Mayfield Childcare |
Charter Hall and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Mayfield Childcare
The main advantage of trading using opposite Charter Hall and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| Charter Hall vs. Scentre Group | Charter Hall vs. Vicinity Centres Re | Charter Hall vs. Charter Hall Retail | Charter Hall vs. Cromwell Property Group |
| Mayfield Childcare vs. PVW Resources | Mayfield Childcare vs. Woolworths | Mayfield Childcare vs. Wesfarmers | Mayfield Childcare vs. Coles Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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