Correlation Between FIRST SHIP and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both FIRST SHIP 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 FIRST SHIP and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIRST SHIP LEASE and Aristocrat Leisure Limited, you can compare the effects of market volatilities on FIRST SHIP 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 FIRST SHIP with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIRST SHIP and Aristocrat Leisure.
Diversification Opportunities for FIRST SHIP and Aristocrat Leisure
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between FIRST and Aristocrat is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding FIRST SHIP LEASE and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and FIRST SHIP 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 FIRST SHIP LEASE 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 FIRST SHIP i.e., FIRST SHIP and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between FIRST SHIP and Aristocrat Leisure
Assuming the 90 days horizon FIRST SHIP LEASE is expected to generate 1.93 times more return on investment than Aristocrat Leisure. However, FIRST SHIP is 1.93 times more volatile than Aristocrat Leisure Limited. It trades about 0.11 of its potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.16 per unit of risk. If you would invest 2.26 in FIRST SHIP LEASE on October 24, 2024 and sell it today you would earn a total of 0.08 from holding FIRST SHIP LEASE or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FIRST SHIP LEASE vs. Aristocrat Leisure Limited
Performance |
| Timeline |
| FIRST SHIP LEASE |
| Aristocrat Leisure |
FIRST SHIP and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIRST SHIP and Aristocrat Leisure
The main advantage of trading using opposite FIRST SHIP and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIRST SHIP 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.| FIRST SHIP vs. PACIFIC ONLINE | FIRST SHIP vs. YATRA ONLINE DL 0001 | FIRST SHIP vs. NEWELL RUBBERMAID | FIRST SHIP vs. Summit Materials |
| Aristocrat Leisure vs. AEGEAN AIRLINES | Aristocrat Leisure vs. United Airlines Holdings | Aristocrat Leisure vs. China Eastern Airlines | Aristocrat Leisure vs. GREENX METALS LTD |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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