Correlation Between Dexus Convenience and Seven West
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience and Seven West 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 Seven West 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 Seven West Media, you can compare the effects of market volatilities on Dexus Convenience and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and Seven West.
Diversification Opportunities for Dexus Convenience and Seven West
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dexus and Seven is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Dexus Convenience i.e., Dexus Convenience and Seven West go up and down completely randomly.
Pair Corralation between Dexus Convenience and Seven West
Assuming the 90 days trading horizon Dexus Convenience Retail is expected to generate 0.29 times more return on investment than Seven West. However, Dexus Convenience Retail is 3.47 times less risky than Seven West. It trades about -0.01 of its potential returns per unit of risk. Seven West Media is currently generating about -0.1 per unit of risk. If you would invest 293.00 in Dexus Convenience Retail on September 12, 2024 and sell it today you would lose (2.00) from holding Dexus Convenience Retail or give up 0.68% 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. Seven West Media
Performance |
| Timeline |
| Dexus Convenience Retail |
| Seven West Media |
Dexus Convenience and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and Seven West
The main advantage of trading using opposite Dexus Convenience and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West'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 |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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