Correlation Between Retail Food and Dexus Convenience
Can any of the company-specific risk be diversified away by investing in both Retail Food and Dexus Convenience 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 Dexus Convenience 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 Dexus Convenience Retail, you can compare the effects of market volatilities on Retail Food and Dexus Convenience 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 Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Dexus Convenience.
Diversification Opportunities for Retail Food and Dexus Convenience
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Retail and Dexus is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Dexus Convenience Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Convenience Retail 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 Dexus Convenience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Convenience Retail has no effect on the direction of Retail Food i.e., Retail Food and Dexus Convenience go up and down completely randomly.
Pair Corralation between Retail Food and Dexus Convenience
Assuming the 90 days trading horizon Retail Food Group is expected to generate 2.31 times more return on investment than Dexus Convenience. However, Retail Food is 2.31 times more volatile than Dexus Convenience Retail. It trades about 0.06 of its potential returns per unit of risk. Dexus Convenience Retail is currently generating about 0.1 per unit of risk. If you would invest 6.80 in Retail Food Group on August 28, 2024 and sell it today you would earn a total of 0.50 from holding Retail Food Group or generate 7.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Food Group vs. Dexus Convenience Retail
Performance |
| Timeline |
| Retail Food Group |
| Dexus Convenience Retail |
Retail Food and Dexus Convenience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Food and Dexus Convenience
The main advantage of trading using opposite Retail Food and Dexus Convenience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Food position performs unexpectedly, Dexus Convenience 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 Dexus Convenience will offset losses from the drop in Dexus Convenience's long position.| Retail Food vs. Hotel Property Investments | Retail Food vs. Credit Clear | Retail Food vs. Bank of Queensland | Retail Food vs. Air New Zealand |
| Dexus Convenience vs. Australian Agricultural | Dexus Convenience vs. Regis Healthcare | Dexus Convenience vs. Retail Food Group | Dexus Convenience vs. Beston Global Food |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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