Correlation Between EROAD and Auswide Bank
Can any of the company-specific risk be diversified away by investing in both EROAD and Auswide Bank 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 EROAD and Auswide Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Auswide Bank, you can compare the effects of market volatilities on EROAD and Auswide Bank 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 EROAD with a short position of Auswide Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Auswide Bank.
Diversification Opportunities for EROAD and Auswide Bank
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between EROAD and Auswide is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Auswide Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auswide Bank and EROAD 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 EROAD are associated (or correlated) with Auswide Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auswide Bank has no effect on the direction of EROAD i.e., EROAD and Auswide Bank go up and down completely randomly.
Pair Corralation between EROAD and Auswide Bank
Assuming the 90 days trading horizon EROAD is expected to generate 2.25 times more return on investment than Auswide Bank. However, EROAD is 2.25 times more volatile than Auswide Bank. It trades about 0.03 of its potential returns per unit of risk. Auswide Bank is currently generating about 0.02 per unit of risk. If you would invest 75.00 in EROAD on August 27, 2024 and sell it today you would earn a total of 9.00 from holding EROAD or generate 12.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EROAD vs. Auswide Bank
Performance |
| Timeline |
| EROAD |
| Auswide Bank |
EROAD and Auswide Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Auswide Bank
The main advantage of trading using opposite EROAD and Auswide Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, Auswide Bank 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 Auswide Bank will offset losses from the drop in Auswide Bank's long position.| EROAD vs. Auctus Alternative Investments | EROAD vs. The Environmental Group | EROAD vs. Argo Investments | EROAD vs. Eagle Mountain Mining |
| Auswide Bank vs. Aneka Tambang Tbk | Auswide Bank vs. BHP Group Limited | Auswide Bank vs. Commonwealth Bank of | Auswide Bank vs. Commonwealth Bank of |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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