Correlation Between LONDON STEXUNSPADRS12 and ASX
Can any of the company-specific risk be diversified away by investing in both LONDON STEXUNSPADRS12 and ASX 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 LONDON STEXUNSPADRS12 and ASX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LONDON STEXUNSPADRS12 and ASX LTD UNSPONSADR, you can compare the effects of market volatilities on LONDON STEXUNSPADRS12 and ASX 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 LONDON STEXUNSPADRS12 with a short position of ASX. Check out your portfolio center. Please also check ongoing floating volatility patterns of LONDON STEXUNSPADRS12 and ASX.
Diversification Opportunities for LONDON STEXUNSPADRS12 and ASX
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LONDON and ASX is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding LONDON STEXUNSPADRS12 and ASX LTD UNSPONSADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASX LTD UNSPONSADR and LONDON STEXUNSPADRS12 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 LONDON STEXUNSPADRS12 are associated (or correlated) with ASX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASX LTD UNSPONSADR has no effect on the direction of LONDON STEXUNSPADRS12 i.e., LONDON STEXUNSPADRS12 and ASX go up and down completely randomly.
Pair Corralation between LONDON STEXUNSPADRS12 and ASX
Assuming the 90 days trading horizon LONDON STEXUNSPADRS12 is expected to generate 1.08 times more return on investment than ASX. However, LONDON STEXUNSPADRS12 is 1.08 times more volatile than ASX LTD UNSPONSADR. It trades about 0.07 of its potential returns per unit of risk. ASX LTD UNSPONSADR is currently generating about 0.0 per unit of risk. If you would invest 2,098 in LONDON STEXUNSPADRS12 on November 2, 2024 and sell it today you would earn a total of 1,362 from holding LONDON STEXUNSPADRS12 or generate 64.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LONDON STEXUNSPADRS12 vs. ASX LTD UNSPONSADR
Performance |
| Timeline |
| LONDON STEXUNSPADRS12 |
| ASX LTD UNSPONSADR |
LONDON STEXUNSPADRS12 and ASX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LONDON STEXUNSPADRS12 and ASX
The main advantage of trading using opposite LONDON STEXUNSPADRS12 and ASX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LONDON STEXUNSPADRS12 position performs unexpectedly, ASX 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 ASX will offset losses from the drop in ASX's long position.| LONDON STEXUNSPADRS12 vs. CVR Medical Corp | LONDON STEXUNSPADRS12 vs. Apollo Medical Holdings | LONDON STEXUNSPADRS12 vs. RYU Apparel | LONDON STEXUNSPADRS12 vs. BROADSTNET LEADL 00025 |
| ASX vs. Citic Telecom International | ASX vs. Chunghwa Telecom Co | ASX vs. TELECOM ITALIA | ASX 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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