Correlation Between Flagship Investments and Home Consortium
Can any of the company-specific risk be diversified away by investing in both Flagship Investments and Home Consortium 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 Home Consortium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and Home Consortium, you can compare the effects of market volatilities on Flagship Investments and Home Consortium 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 Home Consortium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Home Consortium.
Diversification Opportunities for Flagship Investments and Home Consortium
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Flagship and Home is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium 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 Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of Flagship Investments i.e., Flagship Investments and Home Consortium go up and down completely randomly.
Pair Corralation between Flagship Investments and Home Consortium
Assuming the 90 days trading horizon Flagship Investments is expected to generate 3.08 times less return on investment than Home Consortium. But when comparing it to its historical volatility, Flagship Investments is 1.28 times less risky than Home Consortium. It trades about 0.09 of its potential returns per unit of risk. Home Consortium is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 723.00 in Home Consortium on September 2, 2024 and sell it today you would earn a total of 510.00 from holding Home Consortium or generate 70.54% 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. Home Consortium
Performance |
| Timeline |
| Flagship Investments |
| Home Consortium |
Flagship Investments and Home Consortium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and Home Consortium
The main advantage of trading using opposite Flagship Investments and Home Consortium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments position performs unexpectedly, Home Consortium 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 Home Consortium will offset losses from the drop in Home Consortium's long position.| Flagship Investments vs. Lendlease Group | Flagship Investments vs. Hutchison Telecommunications | Flagship Investments vs. BSP Financial Group | Flagship Investments vs. National Australia Bank |
| Home Consortium vs. Scentre Group | Home Consortium vs. Vicinity Centres Re | Home Consortium vs. Charter Hall Retail | Home Consortium vs. Cromwell Property Group |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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