Correlation Between Charter Hall and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Charter Hall and Mount Gibson 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 Mount Gibson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Hall Retail and Mount Gibson Iron, you can compare the effects of market volatilities on Charter Hall and Mount Gibson 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 Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Hall and Mount Gibson.
Diversification Opportunities for Charter Hall and Mount Gibson
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Charter and Mount is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Charter Hall Retail and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron 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 Retail are associated (or correlated) with Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of Charter Hall i.e., Charter Hall and Mount Gibson go up and down completely randomly.
Pair Corralation between Charter Hall and Mount Gibson
Assuming the 90 days trading horizon Charter Hall Retail is expected to generate 0.49 times more return on investment than Mount Gibson. However, Charter Hall Retail is 2.04 times less risky than Mount Gibson. It trades about -0.04 of its potential returns per unit of risk. Mount Gibson Iron is currently generating about -0.14 per unit of risk. If you would invest 343.00 in Charter Hall Retail on August 27, 2024 and sell it today you would lose (3.00) from holding Charter Hall Retail or give up 0.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Hall Retail vs. Mount Gibson Iron
Performance |
| Timeline |
| Charter Hall Retail |
| Mount Gibson Iron |
Charter Hall and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Hall and Mount Gibson
The main advantage of trading using opposite Charter Hall and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Hall position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson's long position.| Charter Hall vs. Cromwell Property Group | Charter Hall vs. GDI Property Group | Charter Hall vs. Australian Unity Office |
| Mount Gibson vs. Northern Star Resources | Mount Gibson vs. Evolution Mining | Mount Gibson vs. Bluescope Steel | Mount Gibson vs. Sandfire Resources NL |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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