Correlation Between SPORT LISBOA and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both SPORT LISBOA and Australian Agricultural 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 SPORT LISBOA and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORT LISBOA E and Australian Agricultural, you can compare the effects of market volatilities on SPORT LISBOA and Australian Agricultural 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 SPORT LISBOA with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORT LISBOA and Australian Agricultural.
Diversification Opportunities for SPORT LISBOA and Australian Agricultural
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPORT and Australian is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and Australian Agricultural go up and down completely randomly.
Pair Corralation between SPORT LISBOA and Australian Agricultural
Assuming the 90 days horizon SPORT LISBOA E is expected to generate 1.46 times more return on investment than Australian Agricultural. However, SPORT LISBOA is 1.46 times more volatile than Australian Agricultural. It trades about 0.04 of its potential returns per unit of risk. Australian Agricultural is currently generating about 0.01 per unit of risk. If you would invest 281.00 in SPORT LISBOA E on September 24, 2024 and sell it today you would earn a total of 29.00 from holding SPORT LISBOA E or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPORT LISBOA E vs. Australian Agricultural
Performance |
| Timeline |
| SPORT LISBOA E |
| Australian Agricultural |
SPORT LISBOA and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPORT LISBOA and Australian Agricultural
The main advantage of trading using opposite SPORT LISBOA and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| SPORT LISBOA vs. The Walt Disney | SPORT LISBOA vs. The Walt Disney | SPORT LISBOA vs. Charter Communications | SPORT LISBOA vs. Warner Music Group |
| Australian Agricultural vs. Archer Daniels Midland | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. Wilmar International Limited | Australian Agricultural vs. MOWI ASA SPADR |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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