Correlation Between Dexus Convenience and Legacy Iron
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience and Legacy Iron 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 Legacy Iron 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 Legacy Iron Ore, you can compare the effects of market volatilities on Dexus Convenience and Legacy Iron 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 Legacy Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and Legacy Iron.
Diversification Opportunities for Dexus Convenience and Legacy Iron
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dexus and Legacy is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and Legacy Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Iron Ore 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 Legacy Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Iron Ore has no effect on the direction of Dexus Convenience i.e., Dexus Convenience and Legacy Iron go up and down completely randomly.
Pair Corralation between Dexus Convenience and Legacy Iron
Assuming the 90 days trading horizon Dexus Convenience Retail is expected to generate 0.2 times more return on investment than Legacy Iron. However, Dexus Convenience Retail is 5.05 times less risky than Legacy Iron. It trades about -0.11 of its potential returns per unit of risk. Legacy Iron Ore is currently generating about -0.31 per unit of risk. If you would invest 297.00 in Dexus Convenience Retail on September 14, 2024 and sell it today you would lose (9.00) from holding Dexus Convenience Retail or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dexus Convenience Retail vs. Legacy Iron Ore
Performance |
| Timeline |
| Dexus Convenience Retail |
| Legacy Iron Ore |
Dexus Convenience and Legacy Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and Legacy Iron
The main advantage of trading using opposite Dexus Convenience and Legacy Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience position performs unexpectedly, Legacy Iron 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 Legacy Iron will offset losses from the drop in Legacy Iron's long position.| Dexus Convenience vs. Toys R Us | Dexus Convenience vs. Queste Communications | Dexus Convenience vs. TPG Telecom | Dexus Convenience vs. Computershare |
| Legacy Iron vs. Aussie Broadband | Legacy Iron vs. Galena Mining | Legacy Iron vs. Capitol Health | Legacy Iron vs. Health and Plant |
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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