Correlation Between Super Retail and Iron Road
Can any of the company-specific risk be diversified away by investing in both Super Retail and Iron Road 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 Iron Road 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 Iron Road, you can compare the effects of market volatilities on Super Retail and Iron Road 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 Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and Iron Road.
Diversification Opportunities for Super Retail and Iron Road
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Super and Iron is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road 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 Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road has no effect on the direction of Super Retail i.e., Super Retail and Iron Road go up and down completely randomly.
Pair Corralation between Super Retail and Iron Road
Assuming the 90 days trading horizon Super Retail Group is expected to generate 0.57 times more return on investment than Iron Road. However, Super Retail Group is 1.77 times less risky than Iron Road. It trades about 0.18 of its potential returns per unit of risk. Iron Road is currently generating about -0.2 per unit of risk. If you would invest 1,518 in Super Retail Group on November 1, 2024 and sell it today you would earn a total of 65.00 from holding Super Retail Group or generate 4.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Super Retail Group vs. Iron Road
Performance |
| Timeline |
| Super Retail Group |
| Iron Road |
Super Retail and Iron Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Retail and Iron Road
The main advantage of trading using opposite Super Retail and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail position performs unexpectedly, Iron Road 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 Iron Road will offset losses from the drop in Iron Road's long position.| Super Retail vs. Djerriwarrh Investments | Super Retail vs. Technology One | Super Retail vs. Pinnacle Investment Management | Super Retail vs. Advanced Braking Technology |
| Iron Road vs. Super Retail Group | Iron Road vs. Collins Foods | Iron Road vs. Cleanaway Waste Management | Iron Road vs. Navigator Global Investments |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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