Correlation Between Errawarra Resources and Dexus Convenience
Can any of the company-specific risk be diversified away by investing in both Errawarra Resources 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 Errawarra Resources and Dexus Convenience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Errawarra Resources and Dexus Convenience Retail, you can compare the effects of market volatilities on Errawarra Resources 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 Errawarra Resources with a short position of Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Errawarra Resources and Dexus Convenience.
Diversification Opportunities for Errawarra Resources and Dexus Convenience
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Errawarra and Dexus is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Errawarra Resources 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 Errawarra 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 Errawarra Resources 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 Errawarra Resources i.e., Errawarra Resources and Dexus Convenience go up and down completely randomly.
Pair Corralation between Errawarra Resources and Dexus Convenience
Assuming the 90 days trading horizon Errawarra Resources is expected to generate 7.24 times more return on investment than Dexus Convenience. However, Errawarra Resources is 7.24 times more volatile than Dexus Convenience Retail. It trades about 0.01 of its potential returns per unit of risk. Dexus Convenience Retail is currently generating about 0.07 per unit of risk. If you would invest 12.00 in Errawarra Resources on September 3, 2024 and sell it today you would lose (5.80) from holding Errawarra Resources or give up 48.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Errawarra Resources vs. Dexus Convenience Retail
Performance |
| Timeline |
| Errawarra Resources |
| Dexus Convenience Retail |
Errawarra Resources and Dexus Convenience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Errawarra Resources and Dexus Convenience
The main advantage of trading using opposite Errawarra Resources and Dexus Convenience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Errawarra Resources 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.| Errawarra Resources vs. Retail Food Group | Errawarra Resources vs. Capitol Health | Errawarra Resources vs. Singular Health Group | Errawarra Resources vs. ABACUS STORAGE KING |
| Dexus Convenience vs. Seven West Media | Dexus Convenience vs. Carlton Investments | Dexus Convenience vs. Clime Investment Management | Dexus Convenience vs. Centaurus Metals |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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