Correlation Between Flagship Investments and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both Flagship Investments 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 Flagship Investments and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and Aristocrat Leisure, you can compare the effects of market volatilities on Flagship Investments 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 Flagship Investments with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Aristocrat Leisure.
Diversification Opportunities for Flagship Investments and Aristocrat Leisure
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Flagship and Aristocrat is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Aristocrat Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and Flagship Investments 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 Flagship Investments 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 Flagship Investments i.e., Flagship Investments and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between Flagship Investments and Aristocrat Leisure
Assuming the 90 days trading horizon Flagship Investments is expected to generate 1.98 times less return on investment than Aristocrat Leisure. But when comparing it to its historical volatility, Flagship Investments is 1.03 times less risky than Aristocrat Leisure. It trades about 0.06 of its potential returns per unit of risk. Aristocrat Leisure is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,959 in Aristocrat Leisure on September 12, 2024 and sell it today you would earn a total of 2,831 from holding Aristocrat Leisure or generate 71.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flagship Investments vs. Aristocrat Leisure
Performance |
| Timeline |
| Flagship Investments |
| Aristocrat Leisure |
Flagship Investments and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and Aristocrat Leisure
The main advantage of trading using opposite Flagship Investments and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments 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.| Flagship Investments vs. MetalsGrove Mining | Flagship Investments vs. Perseus Mining | Flagship Investments vs. Retail Food Group | Flagship Investments vs. Infomedia |
| Aristocrat Leisure vs. Aneka Tambang Tbk | Aristocrat Leisure vs. BHP Group Limited | Aristocrat Leisure vs. Commonwealth Bank | Aristocrat Leisure vs. Commonwealth Bank of |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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