Correlation Between Diversified United and Bendigo
Can any of the company-specific risk be diversified away by investing in both Diversified United and Bendigo 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 Diversified United and Bendigo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diversified United Investment and Bendigo and Adelaide, you can compare the effects of market volatilities on Diversified United and Bendigo 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 Diversified United with a short position of Bendigo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diversified United and Bendigo.
Diversification Opportunities for Diversified United and Bendigo
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diversified and Bendigo is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Diversified United Investment and Bendigo and Adelaide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bendigo and Adelaide and Diversified United 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 Diversified United Investment are associated (or correlated) with Bendigo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bendigo and Adelaide has no effect on the direction of Diversified United i.e., Diversified United and Bendigo go up and down completely randomly.
Pair Corralation between Diversified United and Bendigo
Assuming the 90 days trading horizon Diversified United Investment is expected to generate 1.23 times more return on investment than Bendigo. However, Diversified United is 1.23 times more volatile than Bendigo and Adelaide. It trades about 0.15 of its potential returns per unit of risk. Bendigo and Adelaide is currently generating about 0.01 per unit of risk. If you would invest 522.00 in Diversified United Investment on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Diversified United Investment or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Diversified United Investment vs. Bendigo and Adelaide
Performance |
| Timeline |
| Diversified United |
| Bendigo and Adelaide |
Diversified United and Bendigo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diversified United and Bendigo
The main advantage of trading using opposite Diversified United and Bendigo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diversified United position performs unexpectedly, Bendigo 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 Bendigo will offset losses from the drop in Bendigo's long position.| Diversified United vs. Australian Foundation Investment | Diversified United vs. MFF Capital Investments | Diversified United vs. Metrics Master Income | Diversified United vs. L1 Long Short |
| Bendigo vs. Regal Funds Management | Bendigo vs. Diversified United Investment | Bendigo vs. Microequities Asset Management | Bendigo vs. Flagship Investments |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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