Correlation Between G8 Education and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both G8 Education and Mayfield Childcare 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 G8 Education and Mayfield Childcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Mayfield Childcare, you can compare the effects of market volatilities on G8 Education and Mayfield Childcare 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 G8 Education with a short position of Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Mayfield Childcare.
Diversification Opportunities for G8 Education and Mayfield Childcare
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GEM and Mayfield is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare and G8 Education 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 G8 Education are associated (or correlated) with Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of G8 Education i.e., G8 Education and Mayfield Childcare go up and down completely randomly.
Pair Corralation between G8 Education and Mayfield Childcare
Assuming the 90 days trading horizon G8 Education is expected to generate 0.83 times more return on investment than Mayfield Childcare. However, G8 Education is 1.21 times less risky than Mayfield Childcare. It trades about 0.08 of its potential returns per unit of risk. Mayfield Childcare is currently generating about -0.02 per unit of risk. If you would invest 93.00 in G8 Education on August 25, 2024 and sell it today you would earn a total of 38.00 from holding G8 Education or generate 40.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 Education vs. Mayfield Childcare
Performance |
| Timeline |
| G8 Education |
| Mayfield Childcare |
G8 Education and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Mayfield Childcare
The main advantage of trading using opposite G8 Education and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| G8 Education vs. Dexus Convenience Retail | G8 Education vs. Kneomedia | G8 Education vs. Richmond Vanadium Technology | G8 Education vs. Retail Food Group |
| Mayfield Childcare vs. PVW Resources | Mayfield Childcare vs. Woolworths | Mayfield Childcare vs. Wesfarmers | Mayfield Childcare vs. Coles 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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