Correlation Between Flight Centre and HomeToGo
Can any of the company-specific risk be diversified away by investing in both Flight Centre and HomeToGo 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 Flight Centre and HomeToGo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flight Centre Travel and HomeToGo SE, you can compare the effects of market volatilities on Flight Centre and HomeToGo 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 Flight Centre with a short position of HomeToGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flight Centre and HomeToGo.
Diversification Opportunities for Flight Centre and HomeToGo
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Flight and HomeToGo is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Flight Centre Travel and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE and Flight Centre 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 Flight Centre Travel are associated (or correlated) with HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of Flight Centre i.e., Flight Centre and HomeToGo go up and down completely randomly.
Pair Corralation between Flight Centre and HomeToGo
Assuming the 90 days horizon Flight Centre Travel is expected to generate 0.57 times more return on investment than HomeToGo. However, Flight Centre Travel is 1.75 times less risky than HomeToGo. It trades about 0.29 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.06 per unit of risk. If you would invest 960.00 in Flight Centre Travel on September 1, 2024 and sell it today you would earn a total of 110.00 from holding Flight Centre Travel or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Flight Centre Travel vs. HomeToGo SE
Performance |
| Timeline |
| Flight Centre Travel |
| HomeToGo SE |
Flight Centre and HomeToGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flight Centre and HomeToGo
The main advantage of trading using opposite Flight Centre and HomeToGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flight Centre position performs unexpectedly, HomeToGo 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 HomeToGo will offset losses from the drop in HomeToGo's long position.| Flight Centre vs. DeVry Education Group | Flight Centre vs. Adtalem Global Education | Flight Centre vs. PLAY2CHILL SA ZY | Flight Centre vs. Laureate Education |
| HomeToGo vs. Alphabet Class A | HomeToGo vs. Alphabet Class A | HomeToGo vs. Meta Platforms | HomeToGo vs. Tencent Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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