Correlation Between Dexus Convenience and South32
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience and South32 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 South32 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 South32, you can compare the effects of market volatilities on Dexus Convenience and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and South32.
Diversification Opportunities for Dexus Convenience and South32
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dexus and South32 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and South32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 has no effect on the direction of Dexus Convenience i.e., Dexus Convenience and South32 go up and down completely randomly.
Pair Corralation between Dexus Convenience and South32
Assuming the 90 days trading horizon Dexus Convenience Retail is expected to under-perform the South32. But the stock apears to be less risky and, when comparing its historical volatility, Dexus Convenience Retail is 1.86 times less risky than South32. The stock trades about -0.1 of its potential returns per unit of risk. The South32 is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 370.00 in South32 on September 12, 2024 and sell it today you would lose (2.00) from holding South32 or give up 0.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dexus Convenience Retail vs. South32
Performance |
| Timeline |
| Dexus Convenience Retail |
| South32 |
Dexus Convenience and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and South32
The main advantage of trading using opposite Dexus Convenience and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| Dexus Convenience vs. Charter Hall Retail | Dexus Convenience vs. GDI Property Group | Dexus Convenience vs. Australian Unity Office | Dexus Convenience vs. Ecofibre |
| South32 vs. BSP Financial Group | South32 vs. Sky Metals | South32 vs. Wt Financial Group | South32 vs. DY6 Metals |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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