Correlation Between Ecofibre and Australian Bond
Can any of the company-specific risk be diversified away by investing in both Ecofibre and Australian Bond 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 Ecofibre and Australian Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and Australian Bond Exchange, you can compare the effects of market volatilities on Ecofibre and Australian Bond 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 Ecofibre with a short position of Australian Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and Australian Bond.
Diversification Opportunities for Ecofibre and Australian Bond
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ecofibre and Australian is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Australian Bond Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Bond Exchange and Ecofibre 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 Ecofibre are associated (or correlated) with Australian Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Bond Exchange has no effect on the direction of Ecofibre i.e., Ecofibre and Australian Bond go up and down completely randomly.
Pair Corralation between Ecofibre and Australian Bond
Assuming the 90 days trading horizon Ecofibre is expected to under-perform the Australian Bond. But the stock apears to be less risky and, when comparing its historical volatility, Ecofibre is 1.65 times less risky than Australian Bond. The stock trades about -0.05 of its potential returns per unit of risk. The Australian Bond Exchange is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2.10 in Australian Bond Exchange on November 18, 2024 and sell it today you would earn a total of 0.60 from holding Australian Bond Exchange or generate 28.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofibre vs. Australian Bond Exchange
Performance |
| Timeline |
| Ecofibre |
| Australian Bond Exchange |
Ecofibre and Australian Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofibre and Australian Bond
The main advantage of trading using opposite Ecofibre and Australian Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre position performs unexpectedly, Australian Bond 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 Australian Bond will offset losses from the drop in Australian Bond's long position.| Ecofibre vs. Metro Mining | Ecofibre vs. Andean Silver Limited | Ecofibre vs. Autosports Group | Ecofibre vs. Balkan Mining and |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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