Correlation Between DFS Furniture and COMMONWBK AUSTRSPADRS
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and COMMONWBK AUSTRSPADRS 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 DFS Furniture and COMMONWBK AUSTRSPADRS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and COMMONWBK AUSTRSPADRS, you can compare the effects of market volatilities on DFS Furniture and COMMONWBK AUSTRSPADRS 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 DFS Furniture with a short position of COMMONWBK AUSTRSPADRS. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and COMMONWBK AUSTRSPADRS.
Diversification Opportunities for DFS Furniture and COMMONWBK AUSTRSPADRS
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DFS and COMMONWBK is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and COMMONWBK AUSTRSPADRS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMMONWBK AUSTRSPADRS and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with COMMONWBK AUSTRSPADRS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMMONWBK AUSTRSPADRS has no effect on the direction of DFS Furniture i.e., DFS Furniture and COMMONWBK AUSTRSPADRS go up and down completely randomly.
Pair Corralation between DFS Furniture and COMMONWBK AUSTRSPADRS
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 1.97 times more return on investment than COMMONWBK AUSTRSPADRS. However, DFS Furniture is 1.97 times more volatile than COMMONWBK AUSTRSPADRS. It trades about 0.07 of its potential returns per unit of risk. COMMONWBK AUSTRSPADRS is currently generating about 0.14 per unit of risk. If you would invest 108.00 in DFS Furniture PLC on September 14, 2024 and sell it today you would earn a total of 58.00 from holding DFS Furniture PLC or generate 53.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. COMMONWBK AUSTRSPADRS
Performance |
| Timeline |
| DFS Furniture PLC |
| COMMONWBK AUSTRSPADRS |
DFS Furniture and COMMONWBK AUSTRSPADRS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and COMMONWBK AUSTRSPADRS
The main advantage of trading using opposite DFS Furniture and COMMONWBK AUSTRSPADRS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, COMMONWBK AUSTRSPADRS 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 COMMONWBK AUSTRSPADRS will offset losses from the drop in COMMONWBK AUSTRSPADRS's long position.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| COMMONWBK AUSTRSPADRS vs. DFS Furniture PLC | COMMONWBK AUSTRSPADRS vs. INVITATION HOMES DL | COMMONWBK AUSTRSPADRS vs. LGI Homes | COMMONWBK AUSTRSPADRS vs. CENTURIA OFFICE REIT |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |