Correlation Between Ecofibre and Dexus Convenience
Can any of the company-specific risk be diversified away by investing in both Ecofibre and Dexus Convenience 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 Dexus Convenience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and Dexus Convenience Retail, you can compare the effects of market volatilities on Ecofibre and Dexus Convenience 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 Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and Dexus Convenience.
Diversification Opportunities for Ecofibre and Dexus Convenience
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ecofibre and Dexus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre and Dexus Convenience Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Convenience Retail 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 Dexus Convenience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Convenience Retail has no effect on the direction of Ecofibre i.e., Ecofibre and Dexus Convenience go up and down completely randomly.
Pair Corralation between Ecofibre and Dexus Convenience
Assuming the 90 days trading horizon Ecofibre is expected to under-perform the Dexus Convenience. In addition to that, Ecofibre is 3.45 times more volatile than Dexus Convenience Retail. It trades about -0.36 of its total potential returns per unit of risk. Dexus Convenience Retail is currently generating about -0.09 per unit of volatility. If you would invest 299.00 in Dexus Convenience Retail on September 13, 2024 and sell it today you would lose (7.00) from holding Dexus Convenience Retail or give up 2.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofibre vs. Dexus Convenience Retail
Performance |
| Timeline |
| Ecofibre |
| Dexus Convenience Retail |
Ecofibre and Dexus Convenience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofibre and Dexus Convenience
The main advantage of trading using opposite Ecofibre and Dexus Convenience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre position performs unexpectedly, Dexus Convenience 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 Dexus Convenience will offset losses from the drop in Dexus Convenience's long position.| Ecofibre vs. Computershare | Ecofibre vs. Retail Food Group | Ecofibre vs. Hutchison Telecommunications | Ecofibre vs. Oneview Healthcare PLC |
| Dexus Convenience vs. Legacy Iron Ore | Dexus Convenience vs. Retail Food Group | Dexus Convenience vs. Vulcan Steel | Dexus Convenience vs. Phoslock Environmental Technologies |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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