Correlation Between Ecofibre and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Ecofibre and Australian Unity 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 Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and Australian Unity Office, you can compare the effects of market volatilities on Ecofibre and Australian Unity 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 Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and Australian Unity.
Diversification Opportunities for Ecofibre and Australian Unity
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ecofibre and Australian is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office 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 Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Ecofibre i.e., Ecofibre and Australian Unity go up and down completely randomly.
Pair Corralation between Ecofibre and Australian Unity
Assuming the 90 days trading horizon Ecofibre is expected to generate 6.79 times more return on investment than Australian Unity. However, Ecofibre is 6.79 times more volatile than Australian Unity Office. It trades about 0.11 of its potential returns per unit of risk. Australian Unity Office is currently generating about -0.14 per unit of risk. If you would invest 3.20 in Ecofibre on August 30, 2024 and sell it today you would earn a total of 0.80 from holding Ecofibre or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofibre vs. Australian Unity Office
Performance |
| Timeline |
| Ecofibre |
| Australian Unity Office |
Ecofibre and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofibre and Australian Unity
The main advantage of trading using opposite Ecofibre and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre position performs unexpectedly, Australian Unity 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 Unity will offset losses from the drop in Australian Unity's long position.| Ecofibre vs. Aneka Tambang Tbk | Ecofibre vs. Australia and New | Ecofibre vs. National Australia Bank | Ecofibre vs. National Australia Bank |
| Australian Unity vs. Charter Hall Retail | Australian Unity vs. Ecofibre | Australian Unity vs. iShares Global Healthcare | Australian Unity vs. Adriatic Metals Plc |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Global Correlations Find global opportunities by holding instruments from different markets |