Correlation Between Origin Energy and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Origin Energy and DFS Furniture 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 Origin Energy and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Origin Energy Limited and DFS Furniture PLC, you can compare the effects of market volatilities on Origin Energy and DFS Furniture 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 Origin Energy with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Origin Energy and DFS Furniture.
Diversification Opportunities for Origin Energy and DFS Furniture
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Origin and DFS is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Origin Energy Limited and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Origin Energy 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 Origin Energy Limited are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Origin Energy i.e., Origin Energy and DFS Furniture go up and down completely randomly.
Pair Corralation between Origin Energy and DFS Furniture
Assuming the 90 days horizon Origin Energy is expected to generate 1.88 times less return on investment than DFS Furniture. But when comparing it to its historical volatility, Origin Energy Limited is 1.32 times less risky than DFS Furniture. It trades about 0.05 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 125.00 in DFS Furniture PLC on September 3, 2024 and sell it today you would earn a total of 37.00 from holding DFS Furniture PLC or generate 29.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Origin Energy Limited vs. DFS Furniture PLC
Performance |
| Timeline |
| Origin Energy Limited |
| DFS Furniture PLC |
Origin Energy and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Origin Energy and DFS Furniture
The main advantage of trading using opposite Origin Energy and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Origin Energy position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Origin Energy vs. DFS Furniture PLC | Origin Energy vs. LGI Homes | Origin Energy vs. Autohome ADR | Origin Energy vs. MAVEN WIRELESS SWEDEN |
| DFS Furniture vs. ASURE SOFTWARE | DFS Furniture vs. Magic Software Enterprises | DFS Furniture vs. Axway Software SA | DFS Furniture vs. Lion Biotechnologies |
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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