Correlation Between Super Retail and South32
Can any of the company-specific risk be diversified away by investing in both Super Retail and South32 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 South32 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 South32, you can compare the effects of market volatilities on Super Retail and South32 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 South32. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Retail and South32.
Diversification Opportunities for Super Retail and South32
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Super and South32 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and South32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South32 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 South32. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South32 has no effect on the direction of Super Retail i.e., Super Retail and South32 go up and down completely randomly.
Pair Corralation between Super Retail and South32
Assuming the 90 days trading horizon Super Retail Group is expected to generate 0.67 times more return on investment than South32. However, Super Retail Group is 1.49 times less risky than South32. It trades about 0.1 of its potential returns per unit of risk. South32 is currently generating about -0.06 per unit of risk. If you would invest 1,427 in Super Retail Group on September 4, 2024 and sell it today you would earn a total of 42.00 from holding Super Retail Group or generate 2.94% 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. South32
Performance |
| Timeline |
| Super Retail Group |
| South32 |
Super Retail and South32 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Retail and South32
The main advantage of trading using opposite Super Retail and South32 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Retail position performs unexpectedly, South32 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 South32 will offset losses from the drop in South32's long position.| Super Retail vs. Accent Resources NL | Super Retail vs. Hutchison Telecommunications | Super Retail vs. Energy Resources | Super Retail vs. GO2 People |
| South32 vs. Centaurus Metals | South32 vs. Retail Food Group | South32 vs. Super Retail Group | South32 vs. Dexus Convenience Retail |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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