Correlation Between Retail Food and Challenger
Can any of the company-specific risk be diversified away by investing in both Retail Food and Challenger 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 Challenger 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 Challenger, you can compare the effects of market volatilities on Retail Food and Challenger 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 Challenger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Challenger.
Diversification Opportunities for Retail Food and Challenger
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and Challenger is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Challenger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Challenger 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 Challenger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Challenger has no effect on the direction of Retail Food i.e., Retail Food and Challenger go up and down completely randomly.
Pair Corralation between Retail Food and Challenger
Assuming the 90 days trading horizon Retail Food Group is expected to generate 1.5 times more return on investment than Challenger. However, Retail Food is 1.5 times more volatile than Challenger. It trades about 0.11 of its potential returns per unit of risk. Challenger is currently generating about -0.19 per unit of risk. If you would invest 260.00 in Retail Food Group on September 13, 2024 and sell it today you would earn a total of 28.00 from holding Retail Food Group or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Challenger
Performance |
| Timeline |
| Retail Food Group |
| Challenger |
Retail Food and Challenger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Challenger
The main advantage of trading using opposite Retail Food and Challenger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Challenger 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 Challenger will offset losses from the drop in Challenger's long position.| Retail Food vs. My Foodie Box | Retail Food vs. Queste Communications | Retail Food vs. Clime Investment Management | Retail Food vs. Regal Funds Management |
| Challenger vs. Ainsworth Game Technology | Challenger vs. oOhMedia | Challenger vs. Retail Food Group | Challenger vs. Treasury Wine Estates |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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