Correlation Between Retail Food and Boss Energy
Can any of the company-specific risk be diversified away by investing in both Retail Food and Boss Energy 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 Retail Food and Boss Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Food Group and Boss Energy Limited, you can compare the effects of market volatilities on Retail Food and Boss Energy 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 Retail Food with a short position of Boss Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Boss Energy.
Diversification Opportunities for Retail Food and Boss Energy
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Retail and Boss is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Boss Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boss Energy Limited and Retail Food 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 Retail Food Group are associated (or correlated) with Boss Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boss Energy Limited has no effect on the direction of Retail Food i.e., Retail Food and Boss Energy go up and down completely randomly.
Pair Corralation between Retail Food and Boss Energy
Assuming the 90 days trading horizon Retail Food is expected to generate 1.63 times less return on investment than Boss Energy. In addition to that, Retail Food is 1.05 times more volatile than Boss Energy Limited. It trades about 0.02 of its total potential returns per unit of risk. Boss Energy Limited is currently generating about 0.03 per unit of volatility. If you would invest 214.00 in Boss Energy Limited on September 5, 2024 and sell it today you would earn a total of 55.00 from holding Boss Energy Limited or generate 25.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Retail Food Group vs. Boss Energy Limited
Performance |
| Timeline |
| Retail Food Group |
| Boss Energy Limited |
Retail Food and Boss Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Boss Energy
The main advantage of trading using opposite Retail Food and Boss Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Boss Energy 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 Boss Energy will offset losses from the drop in Boss Energy's long position.| Retail Food vs. Aneka Tambang Tbk | Retail Food vs. BHP Group Limited | Retail Food vs. Commonwealth Bank of | Retail Food vs. Commonwealth Bank of |
| Boss Energy vs. Retail Food Group | Boss Energy vs. Bell Financial Group | Boss Energy vs. Qbe Insurance Group | Boss Energy vs. Magellan Financial Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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