Correlation Between Dexus Convenience and G8 Education
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience and G8 Education 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 Dexus Convenience and G8 Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dexus Convenience Retail and G8 Education, you can compare the effects of market volatilities on Dexus Convenience and G8 Education 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 Dexus Convenience with a short position of G8 Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and G8 Education.
Diversification Opportunities for Dexus Convenience and G8 Education
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dexus and GEM is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and G8 Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 Education and Dexus Convenience 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 Dexus Convenience Retail are associated (or correlated) with G8 Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 Education has no effect on the direction of Dexus Convenience i.e., Dexus Convenience and G8 Education go up and down completely randomly.
Pair Corralation between Dexus Convenience and G8 Education
Assuming the 90 days trading horizon Dexus Convenience Retail is expected to generate 0.67 times more return on investment than G8 Education. However, Dexus Convenience Retail is 1.5 times less risky than G8 Education. It trades about 0.04 of its potential returns per unit of risk. G8 Education is currently generating about -0.08 per unit of risk. If you would invest 291.00 in Dexus Convenience Retail on August 25, 2024 and sell it today you would earn a total of 2.00 from holding Dexus Convenience Retail or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dexus Convenience Retail vs. G8 Education
Performance |
| Timeline |
| Dexus Convenience Retail |
| G8 Education |
Dexus Convenience and G8 Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and G8 Education
The main advantage of trading using opposite Dexus Convenience and G8 Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience position performs unexpectedly, G8 Education 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 G8 Education will offset losses from the drop in G8 Education's long position.| Dexus Convenience vs. Scentre Group | Dexus Convenience vs. Vicinity Centres Re | Dexus Convenience vs. Charter Hall Retail | Dexus Convenience vs. Cromwell Property Group |
| G8 Education vs. Dexus Convenience Retail | G8 Education vs. Kneomedia | G8 Education vs. Richmond Vanadium Technology | G8 Education vs. Retail Food Group |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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