Correlation Between FARM 51 and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both FARM 51 and Aristocrat Leisure 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 FARM 51 and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARM 51 GROUP and Aristocrat Leisure Limited, you can compare the effects of market volatilities on FARM 51 and Aristocrat Leisure 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 FARM 51 with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARM 51 and Aristocrat Leisure.
Diversification Opportunities for FARM 51 and Aristocrat Leisure
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FARM and Aristocrat is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding FARM 51 GROUP and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and FARM 51 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 FARM 51 GROUP are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of FARM 51 i.e., FARM 51 and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between FARM 51 and Aristocrat Leisure
Assuming the 90 days horizon FARM 51 GROUP is expected to under-perform the Aristocrat Leisure. In addition to that, FARM 51 is 1.75 times more volatile than Aristocrat Leisure Limited. It trades about -0.02 of its total potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.09 per unit of volatility. If you would invest 2,129 in Aristocrat Leisure Limited on November 8, 2024 and sell it today you would earn a total of 2,291 from holding Aristocrat Leisure Limited or generate 107.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARM 51 GROUP vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| FARM 51 GROUP |
| Aristocrat Leisure |
FARM 51 and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARM 51 and Aristocrat Leisure
The main advantage of trading using opposite FARM 51 and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARM 51 position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.| FARM 51 vs. Planet Fitness | FARM 51 vs. Telecom Argentina SA | FARM 51 vs. Cellnex Telecom SA | FARM 51 vs. Zoom Video Communications |
| Aristocrat Leisure vs. LOANDEPOT INC A | Aristocrat Leisure vs. PPHE HOTEL GROUP | Aristocrat Leisure vs. Global Ship Lease | Aristocrat Leisure vs. Playa Hotels Resorts |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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