Correlation Between Super Retail and BKI Investment
Can any of the company-specific risk be diversified away by investing in both Super Retail and BKI Investment 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 BKI Investment 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 BKI Investment, you can compare the effects of market volatilities on Super Retail and BKI Investment 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 BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and BKI Investment.
Diversification Opportunities for Super Retail and BKI Investment
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Super and BKI is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment 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 BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Super Retail i.e., Super Retail and BKI Investment go up and down completely randomly.
Pair Corralation between Super Retail and BKI Investment
Assuming the 90 days trading horizon Super Retail Group is expected to generate 1.93 times more return on investment than BKI Investment. However, Super Retail is 1.93 times more volatile than BKI Investment. It trades about 0.11 of its potential returns per unit of risk. BKI Investment is currently generating about 0.06 per unit of risk. If you would invest 1,478 in Super Retail Group on November 3, 2024 and sell it today you would earn a total of 90.00 from holding Super Retail Group or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Super Retail Group vs. BKI Investment
Performance |
| Timeline |
| Super Retail Group |
| BKI Investment |
Super Retail and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Retail and BKI Investment
The main advantage of trading using opposite Super Retail and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.| Super Retail vs. Dicker Data | Super Retail vs. Beam Communications Holdings | Super Retail vs. Chalice Mining Limited | Super Retail vs. Globe Metals Mining |
| BKI Investment vs. Autosports Group | BKI Investment vs. Ras Technology Holdings | BKI Investment vs. Nufarm Finance NZ | BKI Investment 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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