Correlation Between Retail Food and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Retail Food 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 Retail Food and Charter Hall 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 Charter Hall Long, you can compare the effects of market volatilities on Retail Food 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 Retail Food with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Charter Hall.
Diversification Opportunities for Retail Food and Charter Hall
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Retail and Charter is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Charter Hall Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Long 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 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 Long has no effect on the direction of Retail Food i.e., Retail Food and Charter Hall go up and down completely randomly.
Pair Corralation between Retail Food and Charter Hall
Assuming the 90 days trading horizon Retail Food Group is expected to under-perform the Charter Hall. In addition to that, Retail Food is 2.15 times more volatile than Charter Hall Long. It trades about -0.34 of its total potential returns per unit of risk. Charter Hall Long is currently generating about 0.29 per unit of volatility. If you would invest 367.00 in Charter Hall Long on October 21, 2024 and sell it today you would earn a total of 22.00 from holding Charter Hall Long or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Charter Hall Long
Performance |
| Timeline |
| Retail Food Group |
| Charter Hall Long |
Retail Food and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Charter Hall
The main advantage of trading using opposite Retail Food and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food 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.| Retail Food vs. G8 Education | Retail Food vs. Collins Foods | Retail Food vs. Pure Foods Tasmania | Retail Food vs. Carawine Resources Limited |
| Charter Hall vs. Scentre Group | Charter Hall vs. Vicinity Centres Re | Charter Hall vs. Charter Hall Retail | Charter Hall vs. Cromwell Property 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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