Correlation Between Scentre and Dexus Property
Can any of the company-specific risk be diversified away by investing in both Scentre and Dexus Property 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 Property 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 Property Group, you can compare the effects of market volatilities on Scentre and Dexus Property 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 Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scentre and Dexus Property.
Diversification Opportunities for Scentre and Dexus Property
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scentre and Dexus is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Scentre Group and Dexus Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Property Group 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 Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Property Group has no effect on the direction of Scentre i.e., Scentre and Dexus Property go up and down completely randomly.
Pair Corralation between Scentre and Dexus Property
Assuming the 90 days trading horizon Scentre Group is expected to generate 0.89 times more return on investment than Dexus Property. However, Scentre Group is 1.12 times less risky than Dexus Property. It trades about 0.09 of its potential returns per unit of risk. Dexus Property Group is currently generating about -0.01 per unit of risk. If you would invest 342.00 in Scentre Group on August 28, 2024 and sell it today you would earn a total of 22.00 from holding Scentre Group or generate 6.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scentre Group vs. Dexus Property Group
Performance |
| Timeline |
| Scentre Group |
| Dexus Property Group |
Scentre and Dexus Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scentre and Dexus Property
The main advantage of trading using opposite Scentre and Dexus Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scentre position performs unexpectedly, Dexus Property 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 Property will offset losses from the drop in Dexus Property's long position.| Scentre vs. Cromwell Property Group | Scentre vs. GDI Property Group | Scentre vs. Australian Unity Office |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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