Correlation Between Mayfield Childcare and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Mayfield Childcare and Charter Hall 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 Mayfield Childcare and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayfield Childcare and Charter Hall Education, you can compare the effects of market volatilities on Mayfield Childcare and Charter Hall 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 Mayfield Childcare with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayfield Childcare and Charter Hall.
Diversification Opportunities for Mayfield Childcare and Charter Hall
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mayfield and Charter is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mayfield Childcare and Charter Hall Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Education and Mayfield Childcare 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 Mayfield Childcare are associated (or correlated) with Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Education has no effect on the direction of Mayfield Childcare i.e., Mayfield Childcare and Charter Hall go up and down completely randomly.
Pair Corralation between Mayfield Childcare and Charter Hall
Assuming the 90 days trading horizon Mayfield Childcare is expected to generate 1.8 times more return on investment than Charter Hall. However, Mayfield Childcare is 1.8 times more volatile than Charter Hall Education. It trades about 0.16 of its potential returns per unit of risk. Charter Hall Education is currently generating about 0.06 per unit of risk. If you would invest 51.00 in Mayfield Childcare on August 29, 2024 and sell it today you would earn a total of 3.00 from holding Mayfield Childcare or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mayfield Childcare vs. Charter Hall Education
Performance |
| Timeline |
| Mayfield Childcare |
| Charter Hall Education |
Mayfield Childcare and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mayfield Childcare and Charter Hall
The main advantage of trading using opposite Mayfield Childcare and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayfield Childcare position performs unexpectedly, Charter Hall 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 Charter Hall will offset losses from the drop in Charter Hall's long position.| Mayfield Childcare vs. Summit Resources Limited | Mayfield Childcare vs. Champion Iron | Mayfield Childcare vs. Ridley | Mayfield Childcare vs. Peel Mining |
| Charter Hall vs. Australian Unity Office | Charter Hall vs. Champion Iron | Charter Hall vs. Ridley | Charter Hall vs. Peel Mining |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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