Correlation Between EQ Resources and Charter Hall
Can any of the company-specific risk be diversified away by investing in both EQ Resources and Charter Hall 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 EQ Resources and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQ Resources and Charter Hall Retail, you can compare the effects of market volatilities on EQ Resources and Charter Hall 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 EQ Resources with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQ Resources and Charter Hall.
Diversification Opportunities for EQ Resources and Charter Hall
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between EQR and Charter is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding EQ Resources and Charter Hall Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Retail and EQ Resources 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 EQ Resources are associated (or correlated) with Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Retail has no effect on the direction of EQ Resources i.e., EQ Resources and Charter Hall go up and down completely randomly.
Pair Corralation between EQ Resources and Charter Hall
Assuming the 90 days trading horizon EQ Resources is expected to generate 4.98 times more return on investment than Charter Hall. However, EQ Resources is 4.98 times more volatile than Charter Hall Retail. It trades about 0.13 of its potential returns per unit of risk. Charter Hall Retail is currently generating about 0.04 per unit of risk. If you would invest 4.80 in EQ Resources on September 4, 2024 and sell it today you would earn a total of 0.60 from holding EQ Resources or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EQ Resources vs. Charter Hall Retail
Performance |
| Timeline |
| EQ Resources |
| Charter Hall Retail |
EQ Resources and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQ Resources and Charter Hall
The main advantage of trading using opposite EQ Resources and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQ Resources position performs unexpectedly, Charter Hall 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 Charter Hall will offset losses from the drop in Charter Hall's long position.| EQ Resources vs. Argo Investments | EQ Resources vs. Hawsons Iron | EQ Resources vs. Pinnacle Investment Management | EQ Resources vs. BKI Investment |
| Charter Hall vs. Vicinity Centres Re | Charter Hall vs. Cromwell Property Group | Charter Hall vs. Carindale Property Trust | Charter Hall vs. Australian Unity Office |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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