Correlation Between Finexia Financial and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Finexia Financial 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 Finexia Financial and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finexia Financial Group and Aristocrat Leisure, you can compare the effects of market volatilities on Finexia Financial 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 Finexia Financial with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finexia Financial and Aristocrat Leisure.
Diversification Opportunities for Finexia Financial and Aristocrat Leisure
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Finexia and Aristocrat is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Finexia Financial Group and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and Finexia Financial 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 Finexia Financial 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 Finexia Financial i.e., Finexia Financial and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Finexia Financial and Aristocrat Leisure
Assuming the 90 days trading horizon Finexia Financial is expected to generate 1.35 times less return on investment than Aristocrat Leisure. In addition to that, Finexia Financial is 2.79 times more volatile than Aristocrat Leisure. It trades about 0.04 of its total potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.15 per unit of volatility. If you would invest 3,883 in Aristocrat Leisure on September 1, 2024 and sell it today you would earn a total of 2,892 from holding Aristocrat Leisure or generate 74.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finexia Financial Group vs. Aristocrat Leisure
Performance |
| Timeline |
| Finexia Financial |
| Aristocrat Leisure |
Finexia Financial and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finexia Financial and Aristocrat Leisure
The main advantage of trading using opposite Finexia Financial and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finexia Financial 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.| Finexia Financial vs. Ragnar Metals | Finexia Financial vs. Macquarie Bank Limited | Finexia Financial vs. American West Metals | Finexia Financial vs. Perpetual Credit Income |
| Aristocrat Leisure vs. iShares Global Healthcare | Aristocrat Leisure vs. Australian Dairy Farms | Aristocrat Leisure vs. Adriatic Metals Plc | Aristocrat Leisure vs. Australian Agricultural |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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