Correlation Between Dexus Convenience and Toys R
Can any of the company-specific risk be diversified away by investing in both Dexus Convenience and Toys R 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 Toys R 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 Toys R Us, you can compare the effects of market volatilities on Dexus Convenience and Toys R 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 Toys R. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dexus Convenience and Toys R.
Diversification Opportunities for Dexus Convenience and Toys R
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dexus and Toys is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dexus Convenience Retail and Toys R Us in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toys R Us 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 Toys R. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toys R Us has no effect on the direction of Dexus Convenience i.e., Dexus Convenience and Toys R go up and down completely randomly.
Pair Corralation between Dexus Convenience and Toys R
Assuming the 90 days trading horizon Dexus Convenience Retail is expected to generate 0.19 times more return on investment than Toys R. However, Dexus Convenience Retail is 5.34 times less risky than Toys R. It trades about -0.04 of its potential returns per unit of risk. Toys R Us is currently generating about -0.06 per unit of risk. If you would invest 295.00 in Dexus Convenience Retail on October 14, 2024 and sell it today you would lose (9.00) from holding Dexus Convenience Retail or give up 3.05% 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. Toys R Us
Performance |
| Timeline |
| Dexus Convenience Retail |
| Toys R Us |
Dexus Convenience and Toys R Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dexus Convenience and Toys R
The main advantage of trading using opposite Dexus Convenience and Toys R positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dexus Convenience position performs unexpectedly, Toys R 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 Toys R will offset losses from the drop in Toys R's long position.| Dexus Convenience vs. Kip McGrath Education | Dexus Convenience vs. Pinnacle Investment Management | Dexus Convenience vs. IDP Education | Dexus Convenience vs. Dicker Data |
| Toys R vs. Everest Metals | Toys R vs. Vulcan Steel | Toys R vs. Carnegie Clean Energy | Toys R vs. Insurance Australia 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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