Correlation Between Super Retail and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Super Retail and Falcon Metals 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 Falcon Metals 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 Falcon Metals, you can compare the effects of market volatilities on Super Retail and Falcon Metals 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 Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and Falcon Metals.
Diversification Opportunities for Super Retail and Falcon Metals
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Super and Falcon is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon 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 Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Super Retail i.e., Super Retail and Falcon Metals go up and down completely randomly.
Pair Corralation between Super Retail and Falcon Metals
Assuming the 90 days trading horizon Super Retail is expected to generate 3.76 times less return on investment than Falcon Metals. But when comparing it to its historical volatility, Super Retail Group is 3.41 times less risky than Falcon Metals. It trades about 0.18 of its potential returns per unit of risk. Falcon Metals is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 12.00 in Falcon Metals on November 1, 2024 and sell it today you would earn a total of 2.00 from holding Falcon Metals or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Super Retail Group vs. Falcon Metals
Performance |
| Timeline |
| Super Retail Group |
| Falcon Metals |
Super Retail and Falcon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Retail and Falcon Metals
The main advantage of trading using opposite Super Retail and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.| Super Retail vs. Djerriwarrh Investments | Super Retail vs. Technology One | Super Retail vs. Pinnacle Investment Management | Super Retail vs. Advanced Braking Technology |
| Falcon Metals vs. Collins Foods | Falcon Metals vs. Global Health | Falcon Metals vs. Hutchison Telecommunications | Falcon Metals vs. Pure Foods Tasmania |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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