Correlation Between Scentre and Dexus Convenience
Can any of the company-specific risk be diversified away by investing in both Scentre 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 Scentre and Dexus Convenience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scentre Group and Dexus Convenience Retail, you can compare the effects of market volatilities on Scentre 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 Scentre with a short position of Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scentre and Dexus Convenience.
Diversification Opportunities for Scentre and Dexus Convenience
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scentre and Dexus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Scentre 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 Scentre 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 Scentre 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 Scentre i.e., Scentre and Dexus Convenience go up and down completely randomly.
Pair Corralation between Scentre and Dexus Convenience
Assuming the 90 days trading horizon Scentre Group is expected to generate 0.42 times more return on investment than Dexus Convenience. However, Scentre Group is 2.37 times less risky than Dexus Convenience. It trades about 0.4 of its potential returns per unit of risk. Dexus Convenience Retail is currently generating about -0.05 per unit of risk. If you would invest 349.00 in Scentre Group on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Scentre Group or generate 5.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scentre Group vs. Dexus Convenience Retail
Performance |
| Timeline |
| Scentre Group |
| Dexus Convenience Retail |
Scentre and Dexus Convenience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scentre and Dexus Convenience
The main advantage of trading using opposite Scentre and Dexus Convenience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scentre 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.| Scentre vs. Health and Plant | Scentre vs. Ramsay Health Care | Scentre vs. Auctus Alternative Investments | Scentre vs. MFF Capital Investments |
| Dexus Convenience vs. Centaurus Metals | Dexus Convenience vs. Australian Agricultural | Dexus Convenience vs. Platinum Asset Management | Dexus Convenience vs. Falcon Metals |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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