Correlation Between Centaurus Metals and Coles
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and Coles 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 Centaurus Metals and Coles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and Coles Group, you can compare the effects of market volatilities on Centaurus Metals and Coles 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 Centaurus Metals with a short position of Coles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Coles.
Diversification Opportunities for Centaurus Metals and Coles
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Centaurus and Coles is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and Centaurus Metals 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 Centaurus Metals are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Coles go up and down completely randomly.
Pair Corralation between Centaurus Metals and Coles
Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Coles. In addition to that, Centaurus Metals is 4.71 times more volatile than Coles Group. It trades about -0.03 of its total potential returns per unit of risk. Coles Group is currently generating about 0.05 per unit of volatility. If you would invest 1,545 in Coles Group on September 2, 2024 and sell it today you would earn a total of 314.00 from holding Coles Group or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaurus Metals vs. Coles Group
Performance |
| Timeline |
| Centaurus Metals |
| Coles Group |
Centaurus Metals and Coles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and Coles
The main advantage of trading using opposite Centaurus Metals and Coles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, Coles 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 Coles will offset losses from the drop in Coles' long position.| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Sandfire Resources NL |
| Coles vs. Australian Unity Office | Coles vs. Centuria Industrial Reit | Coles vs. Hawsons Iron | Coles vs. Centaurus 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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