Correlation Between Charter Hall and Scentre
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Scentre 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 Scentre 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 Scentre Group, you can compare the effects of market volatilities on Charter Hall and Scentre 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 Scentre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Scentre.
Diversification Opportunities for Charter Hall and Scentre
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charter and Scentre is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Education and Scentre Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scentre Group 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 Scentre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scentre Group has no effect on the direction of Charter Hall i.e., Charter Hall and Scentre go up and down completely randomly.
Pair Corralation between Charter Hall and Scentre
Assuming the 90 days trading horizon Charter Hall is expected to generate 1.22 times less return on investment than Scentre. In addition to that, Charter Hall is 1.23 times more volatile than Scentre Group. It trades about 0.08 of its total potential returns per unit of risk. Scentre Group is currently generating about 0.13 per unit of volatility. If you would invest 302.00 in Scentre Group on August 28, 2024 and sell it today you would earn a total of 62.00 from holding Scentre Group or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Education vs. Scentre Group
Performance |
| Timeline |
| Charter Hall Education |
| Scentre Group |
Charter Hall and Scentre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Scentre
The main advantage of trading using opposite Charter Hall and Scentre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Scentre 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 Scentre will offset losses from the drop in Scentre's long position.| Charter Hall vs. Super Retail Group | Charter Hall vs. Dexus Convenience Retail | Charter Hall vs. Cleanaway Waste Management | Charter Hall vs. Regal Funds Management |
| Scentre vs. Mayfield Childcare | Scentre vs. Retail Food Group | Scentre vs. Autosports Group | Scentre vs. Patriot Battery Metals |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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