Correlation Between DFS Furniture and Origin Energy
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Origin Energy 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 Origin Energy 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 Origin Energy Limited, you can compare the effects of market volatilities on DFS Furniture and Origin Energy 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 Origin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Origin Energy.
Diversification Opportunities for DFS Furniture and Origin Energy
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DFS and Origin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Origin Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Energy Limited 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 Origin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Energy Limited has no effect on the direction of DFS Furniture i.e., DFS Furniture and Origin Energy go up and down completely randomly.
Pair Corralation between DFS Furniture and Origin Energy
Assuming the 90 days trading horizon DFS Furniture is expected to generate 3.67 times less return on investment than Origin Energy. In addition to that, DFS Furniture is 1.67 times more volatile than Origin Energy Limited. It trades about 0.08 of its total potential returns per unit of risk. Origin Energy Limited is currently generating about 0.5 per unit of volatility. If you would invest 580.00 in Origin Energy Limited on September 4, 2024 and sell it today you would earn a total of 80.00 from holding Origin Energy Limited or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Origin Energy Limited
Performance |
| Timeline |
| DFS Furniture PLC |
| Origin Energy Limited |
DFS Furniture and Origin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Origin Energy
The main advantage of trading using opposite DFS Furniture and Origin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Origin Energy 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 Origin Energy will offset losses from the drop in Origin Energy's long position.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| Origin Energy vs. Jacquet Metal Service | Origin Energy vs. Treasury Wine Estates | Origin Energy vs. BOSTON BEER A | Origin Energy vs. FIREWEED METALS P |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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