Correlation Between Future Generation and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Future Generation 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 Future Generation and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Future Generation Global and Charter Hall Retail, you can compare the effects of market volatilities on Future Generation 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 Future Generation with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Generation and Charter Hall.
Diversification Opportunities for Future Generation and Charter Hall
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Future and Charter is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Future Generation Global 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 Future Generation 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 Future Generation Global 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 Future Generation i.e., Future Generation and Charter Hall go up and down completely randomly.
Pair Corralation between Future Generation and Charter Hall
Assuming the 90 days trading horizon Future Generation Global is expected to generate 0.83 times more return on investment than Charter Hall. However, Future Generation Global is 1.2 times less risky than Charter Hall. It trades about 0.07 of its potential returns per unit of risk. Charter Hall Retail is currently generating about 0.01 per unit of risk. If you would invest 101.00 in Future Generation Global on August 31, 2024 and sell it today you would earn a total of 38.00 from holding Future Generation Global or generate 37.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Future Generation Global vs. Charter Hall Retail
Performance |
| Timeline |
| Future Generation Global |
| Charter Hall Retail |
Future Generation and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Generation and Charter Hall
The main advantage of trading using opposite Future Generation and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Generation 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.| Future Generation vs. Perseus Mining | Future Generation vs. Super Retail Group | Future Generation vs. Black Rock Mining | Future Generation vs. Sky Metals |
| Charter Hall vs. Dexus Convenience Retail | Charter Hall vs. Super Retail Group | Charter Hall vs. Firetail Resources | Charter Hall vs. Future Generation Global |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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