Correlation Between Centaurus Metals and Xero
Can any of the company-specific risk be diversified away by investing in both Centaurus Metals and Xero 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 Xero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centaurus Metals and Xero, you can compare the effects of market volatilities on Centaurus Metals and Xero 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 Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaurus Metals and Xero.
Diversification Opportunities for Centaurus Metals and Xero
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Centaurus and Xero is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Centaurus Metals and Xero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero 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 Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero has no effect on the direction of Centaurus Metals i.e., Centaurus Metals and Xero go up and down completely randomly.
Pair Corralation between Centaurus Metals and Xero
Assuming the 90 days trading horizon Centaurus Metals is expected to under-perform the Xero. In addition to that, Centaurus Metals is 2.03 times more volatile than Xero. It trades about -0.08 of its total potential returns per unit of risk. Xero is currently generating about 0.42 per unit of volatility. If you would invest 15,028 in Xero on September 4, 2024 and sell it today you would earn a total of 2,427 from holding Xero or generate 16.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centaurus Metals vs. Xero
Performance |
| Timeline |
| Centaurus Metals |
| Xero |
Centaurus Metals and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centaurus Metals and Xero
The main advantage of trading using opposite Centaurus Metals and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaurus Metals position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| Centaurus Metals vs. Northern Star Resources | Centaurus Metals vs. Evolution Mining | Centaurus Metals vs. Bluescope Steel | Centaurus Metals vs. Sandfire Resources NL |
| Xero vs. Aneka Tambang Tbk | Xero vs. BHP Group Limited | Xero vs. Commonwealth Bank of | Xero vs. Commonwealth Bank of |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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