Correlation Between Seven West and Dexus Convenience
Can any of the company-specific risk be diversified away by investing in both Seven West and Dexus Convenience 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 Seven West and Dexus Convenience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Dexus Convenience Retail, you can compare the effects of market volatilities on Seven West and Dexus Convenience 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 Seven West with a short position of Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Dexus Convenience.
Diversification Opportunities for Seven West and Dexus Convenience
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seven and Dexus is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Dexus Convenience Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Convenience Retail and Seven West 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 Seven West Media are associated (or correlated) with Dexus Convenience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Convenience Retail has no effect on the direction of Seven West i.e., Seven West and Dexus Convenience go up and down completely randomly.
Pair Corralation between Seven West and Dexus Convenience
Assuming the 90 days trading horizon Seven West Media is expected to under-perform the Dexus Convenience. In addition to that, Seven West is 2.21 times more volatile than Dexus Convenience Retail. It trades about -0.06 of its total potential returns per unit of risk. Dexus Convenience Retail is currently generating about 0.04 per unit of volatility. If you would invest 244.00 in Dexus Convenience Retail on September 3, 2024 and sell it today you would earn a total of 51.00 from holding Dexus Convenience Retail or generate 20.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seven West Media vs. Dexus Convenience Retail
Performance |
| Timeline |
| Seven West Media |
| Dexus Convenience Retail |
Seven West and Dexus Convenience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seven West and Dexus Convenience
The main advantage of trading using opposite Seven West and Dexus Convenience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, Dexus Convenience 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 Dexus Convenience will offset losses from the drop in Dexus Convenience's long position.| Seven West vs. ABACUS STORAGE KING | Seven West vs. Queste Communications | Seven West vs. Collins Foods | Seven West vs. Richmond Vanadium Technology |
| Dexus Convenience vs. Seven West Media | Dexus Convenience vs. Carlton Investments | Dexus Convenience vs. Clime Investment Management | Dexus Convenience vs. Centaurus Metals |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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