Correlation Between Spirit Telecom and Auswide Bank
Can any of the company-specific risk be diversified away by investing in both Spirit Telecom and Auswide Bank 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 Spirit Telecom and Auswide Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirit Telecom and Auswide Bank, you can compare the effects of market volatilities on Spirit Telecom and Auswide Bank 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 Spirit Telecom with a short position of Auswide Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Telecom and Auswide Bank.
Diversification Opportunities for Spirit Telecom and Auswide Bank
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spirit and Auswide is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Telecom and Auswide Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auswide Bank and Spirit Telecom 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 Spirit Telecom are associated (or correlated) with Auswide Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auswide Bank has no effect on the direction of Spirit Telecom i.e., Spirit Telecom and Auswide Bank go up and down completely randomly.
Pair Corralation between Spirit Telecom and Auswide Bank
Assuming the 90 days trading horizon Spirit Telecom is expected to generate 2.29 times more return on investment than Auswide Bank. However, Spirit Telecom is 2.29 times more volatile than Auswide Bank. It trades about 0.07 of its potential returns per unit of risk. Auswide Bank is currently generating about 0.07 per unit of risk. If you would invest 4.30 in Spirit Telecom on August 30, 2024 and sell it today you would earn a total of 1.20 from holding Spirit Telecom or generate 27.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirit Telecom vs. Auswide Bank
Performance |
| Timeline |
| Spirit Telecom |
| Auswide Bank |
Spirit Telecom and Auswide Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirit Telecom and Auswide Bank
The main advantage of trading using opposite Spirit Telecom and Auswide Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirit Telecom position performs unexpectedly, Auswide Bank 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 Auswide Bank will offset losses from the drop in Auswide Bank's long position.| Spirit Telecom vs. Tlou Energy | Spirit Telecom vs. Encounter Resources | Spirit Telecom vs. Southern Cross Gold | Spirit Telecom vs. Minbos Resources |
| Auswide Bank vs. Aneka Tambang Tbk | Auswide Bank vs. BHP Group Limited | Auswide Bank vs. Commonwealth Bank | Auswide Bank vs. Commonwealth Bank of |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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