Correlation Between Super Retail and American West
Can any of the company-specific risk be diversified away by investing in both Super Retail and American West 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 Super Retail and American West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Super Retail Group and American West Metals, you can compare the effects of market volatilities on Super Retail and American West 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 Super Retail with a short position of American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and American West.
Diversification Opportunities for Super Retail and American West
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Super and American is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and American West Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American West Metals and Super Retail 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 Super Retail Group are associated (or correlated) with American West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American West Metals has no effect on the direction of Super Retail i.e., Super Retail and American West go up and down completely randomly.
Pair Corralation between Super Retail and American West
Assuming the 90 days trading horizon Super Retail Group is expected to generate 0.55 times more return on investment than American West. However, Super Retail Group is 1.81 times less risky than American West. It trades about -0.12 of its potential returns per unit of risk. American West Metals is currently generating about -0.34 per unit of risk. If you would invest 1,518 in Super Retail Group on August 26, 2024 and sell it today you would lose (68.00) from holding Super Retail Group or give up 4.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Retail Group vs. American West Metals
Performance |
| Timeline |
| Super Retail Group |
| American West Metals |
Super Retail and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Retail and American West
The main advantage of trading using opposite Super Retail and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail position performs unexpectedly, American West 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 American West will offset losses from the drop in American West's long position.| Super Retail vs. Skycity Entertainment Group | Super Retail vs. ABACUS STORAGE KING | Super Retail vs. Vulcan Steel | Super Retail vs. My Foodie Box |
| American West vs. Mach7 Technologies | American West vs. Super Retail Group | American West vs. RLF AgTech | American West vs. Infomedia |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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