Correlation Between Garda Diversified and G8 Education
Can any of the company-specific risk be diversified away by investing in both Garda Diversified and G8 Education 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 Garda Diversified and G8 Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garda Diversified Ppty and G8 Education, you can compare the effects of market volatilities on Garda Diversified and G8 Education 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 Garda Diversified with a short position of G8 Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garda Diversified and G8 Education.
Diversification Opportunities for Garda Diversified and G8 Education
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Garda and GEM is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Garda Diversified Ppty and G8 Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 Education and Garda Diversified 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 Garda Diversified Ppty are associated (or correlated) with G8 Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 Education has no effect on the direction of Garda Diversified i.e., Garda Diversified and G8 Education go up and down completely randomly.
Pair Corralation between Garda Diversified and G8 Education
Assuming the 90 days trading horizon Garda Diversified Ppty is expected to under-perform the G8 Education. But the stock apears to be less risky and, when comparing its historical volatility, Garda Diversified Ppty is 2.08 times less risky than G8 Education. The stock trades about -0.05 of its potential returns per unit of risk. The G8 Education is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 132.00 in G8 Education on August 31, 2024 and sell it today you would earn a total of 4.00 from holding G8 Education or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garda Diversified Ppty vs. G8 Education
Performance |
| Timeline |
| Garda Diversified Ppty |
| G8 Education |
Garda Diversified and G8 Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garda Diversified and G8 Education
The main advantage of trading using opposite Garda Diversified and G8 Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garda Diversified position performs unexpectedly, G8 Education 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 G8 Education will offset losses from the drop in G8 Education's long position.| Garda Diversified vs. Scentre Group | Garda Diversified vs. Charter Hall Retail | Garda Diversified vs. Ecofibre | Garda Diversified vs. iShares Global Healthcare |
| G8 Education vs. Queste Communications | G8 Education vs. Beston Global Food | G8 Education vs. My Foodie Box | G8 Education vs. Super Retail 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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