Correlation Between Toys"R"Us ANZ and GNS
Can any of the company-specific risk be diversified away by investing in both Toys"R"Us ANZ and GNS 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 Toys"R"Us ANZ and GNS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ToysRUs ANZ Limited and The GNS Group, you can compare the effects of market volatilities on Toys"R"Us ANZ and GNS 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 Toys"R"Us ANZ with a short position of GNS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Toys"R"Us ANZ and GNS.
Diversification Opportunities for Toys"R"Us ANZ and GNS
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Toys"R"Us and GNS is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding ToysRUs ANZ Limited and The GNS Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GNS Group and Toys"R"Us ANZ 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 ToysRUs ANZ Limited are associated (or correlated) with GNS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GNS Group has no effect on the direction of Toys"R"Us ANZ i.e., Toys"R"Us ANZ and GNS go up and down completely randomly.
Pair Corralation between Toys"R"Us ANZ and GNS
Assuming the 90 days horizon ToysRUs ANZ Limited is expected to generate 2.66 times more return on investment than GNS. However, Toys"R"Us ANZ is 2.66 times more volatile than The GNS Group. It trades about 0.11 of its potential returns per unit of risk. The GNS Group is currently generating about 0.02 per unit of risk. If you would invest 36.00 in ToysRUs ANZ Limited on August 27, 2024 and sell it today you would lose (32.57) from holding ToysRUs ANZ Limited or give up 90.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ToysRUs ANZ Limited vs. The GNS Group
Performance |
| Timeline |
| ToysRUs ANZ Limited |
| GNS Group |
Toys"R"Us ANZ and GNS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Toys"R"Us ANZ and GNS
The main advantage of trading using opposite Toys"R"Us ANZ and GNS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Toys"R"Us ANZ position performs unexpectedly, GNS 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 GNS will offset losses from the drop in GNS's long position.The idea behind ToysRUs ANZ Limited and The GNS Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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