Correlation Between Southern Cross and Dexus Convenience
Can any of the company-specific risk be diversified away by investing in both Southern Cross 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 Southern Cross and Dexus Convenience into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Cross Media and Dexus Convenience Retail, you can compare the effects of market volatilities on Southern Cross 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 Southern Cross with a short position of Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Cross and Dexus Convenience.
Diversification Opportunities for Southern Cross and Dexus Convenience
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Dexus is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Southern Cross 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 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 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 Southern Cross i.e., Southern Cross and Dexus Convenience go up and down completely randomly.
Pair Corralation between Southern Cross and Dexus Convenience
Assuming the 90 days trading horizon Southern Cross Media is expected to generate 3.54 times more return on investment than Dexus Convenience. However, Southern Cross is 3.54 times more volatile than Dexus Convenience Retail. It trades about 0.15 of its potential returns per unit of risk. Dexus Convenience Retail is currently generating about 0.07 per unit of risk. If you would invest 57.00 in Southern Cross Media on October 14, 2024 and sell it today you would earn a total of 5.00 from holding Southern Cross Media or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Cross Media vs. Dexus Convenience Retail
Performance |
| Timeline |
| Southern Cross Media |
| Dexus Convenience Retail |
Southern Cross and Dexus Convenience Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Cross and Dexus Convenience
The main advantage of trading using opposite Southern Cross and Dexus Convenience positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Cross 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.| Southern Cross vs. Iron Road | Southern Cross vs. Talisman Mining | Southern Cross vs. Kalgoorlie Gold Mining | Southern Cross vs. Globe Metals Mining |
| Dexus Convenience vs. Southern Cross Media | Dexus Convenience vs. Centrex Metals | Dexus Convenience vs. Queste Communications | Dexus Convenience vs. Iron Road |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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