Correlation Between EROAD and Vicinity Centres
Can any of the company-specific risk be diversified away by investing in both EROAD and Vicinity Centres 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 Vicinity Centres into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Vicinity Centres Re, you can compare the effects of market volatilities on EROAD and Vicinity Centres 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 Vicinity Centres. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Vicinity Centres.
Diversification Opportunities for EROAD and Vicinity Centres
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EROAD and Vicinity is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Vicinity Centres Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres 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 Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of EROAD i.e., EROAD and Vicinity Centres go up and down completely randomly.
Pair Corralation between EROAD and Vicinity Centres
Assuming the 90 days trading horizon EROAD is expected to under-perform the Vicinity Centres. In addition to that, EROAD is 2.59 times more volatile than Vicinity Centres Re. It trades about -0.11 of its total potential returns per unit of risk. Vicinity Centres Re is currently generating about 0.0 per unit of volatility. If you would invest 220.00 in Vicinity Centres Re on August 29, 2024 and sell it today you would lose (2.00) from holding Vicinity Centres Re or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EROAD vs. Vicinity Centres Re
Performance |
| Timeline |
| EROAD |
| Vicinity Centres |
EROAD and Vicinity Centres Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Vicinity Centres
The main advantage of trading using opposite EROAD and Vicinity Centres positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, Vicinity Centres 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 Vicinity Centres will offset losses from the drop in Vicinity Centres' long position.The idea behind EROAD and Vicinity Centres Re pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Vicinity Centres vs. Queste Communications | Vicinity Centres vs. Charter Hall Retail | Vicinity Centres vs. Aussie Broadband | Vicinity Centres vs. Janison Education Group |
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
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |