Correlation Between Super Retail and Dotz Nano
Can any of the company-specific risk be diversified away by investing in both Super Retail and Dotz Nano 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 Dotz Nano 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 Dotz Nano, you can compare the effects of market volatilities on Super Retail and Dotz Nano 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 Dotz Nano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and Dotz Nano.
Diversification Opportunities for Super Retail and Dotz Nano
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Super and Dotz is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Dotz Nano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dotz Nano 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 Dotz Nano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dotz Nano has no effect on the direction of Super Retail i.e., Super Retail and Dotz Nano go up and down completely randomly.
Pair Corralation between Super Retail and Dotz Nano
Assuming the 90 days trading horizon Super Retail is expected to generate 5.92 times less return on investment than Dotz Nano. But when comparing it to its historical volatility, Super Retail Group is 6.96 times less risky than Dotz Nano. It trades about 0.14 of its potential returns per unit of risk. Dotz Nano is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Dotz Nano on September 22, 2024 and sell it today you would earn a total of 1.10 from holding Dotz Nano or generate 13.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Retail Group vs. Dotz Nano
Performance |
| Timeline |
| Super Retail Group |
| Dotz Nano |
Super Retail and Dotz Nano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Retail and Dotz Nano
The main advantage of trading using opposite Super Retail and Dotz Nano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail position performs unexpectedly, Dotz Nano 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 Dotz Nano will offset losses from the drop in Dotz Nano's long position.| Super Retail vs. G8 Education | Super Retail vs. Kip McGrath Education | Super Retail vs. Aurelia Metals | Super Retail vs. Janison Education Group |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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