Correlation Between Southern Cross and Kip McGrath
Can any of the company-specific risk be diversified away by investing in both Southern Cross and Kip McGrath 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 Southern Cross and Kip McGrath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Cross Gold and Kip McGrath Education, you can compare the effects of market volatilities on Southern Cross and Kip McGrath 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 Southern Cross with a short position of Kip McGrath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Kip McGrath.
Diversification Opportunities for Southern Cross and Kip McGrath
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Southern and Kip is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross Gold and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education and Southern Cross 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 Southern Cross Gold are associated (or correlated) with Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Southern Cross i.e., Southern Cross and Kip McGrath go up and down completely randomly.
Pair Corralation between Southern Cross and Kip McGrath
Assuming the 90 days trading horizon Southern Cross Gold is expected to generate 1.52 times more return on investment than Kip McGrath. However, Southern Cross is 1.52 times more volatile than Kip McGrath Education. It trades about 0.09 of its potential returns per unit of risk. Kip McGrath Education is currently generating about -0.01 per unit of risk. If you would invest 76.00 in Southern Cross Gold on September 14, 2024 and sell it today you would earn a total of 340.00 from holding Southern Cross Gold or generate 447.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Gold vs. Kip McGrath Education
Performance |
| Timeline |
| Southern Cross Gold |
| Kip McGrath Education |
Southern Cross and Kip McGrath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Kip McGrath
The main advantage of trading using opposite Southern Cross and Kip McGrath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross position performs unexpectedly, Kip McGrath 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 Kip McGrath will offset losses from the drop in Kip McGrath's long position.| Southern Cross vs. ABACUS STORAGE KING | Southern Cross vs. National Storage REIT | Southern Cross vs. Retail Food Group | Southern Cross vs. Computershare |
| Kip McGrath vs. Southern Cross Gold | Kip McGrath vs. Minbos Resources | Kip McGrath vs. Tlou Energy | Kip McGrath vs. Encounter Resources |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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