Correlation Between Vicinity Centres and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Vicinity Centres and Australian Unity 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 Vicinity Centres and Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vicinity Centres Re and Australian Unity Office, you can compare the effects of market volatilities on Vicinity Centres and Australian Unity 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 Vicinity Centres with a short position of Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicinity Centres and Australian Unity.
Diversification Opportunities for Vicinity Centres and Australian Unity
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vicinity and Australian is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Centres Re and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office and Vicinity Centres 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 Vicinity Centres Re are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Vicinity Centres i.e., Vicinity Centres and Australian Unity go up and down completely randomly.
Pair Corralation between Vicinity Centres and Australian Unity
Assuming the 90 days trading horizon Vicinity Centres Re is expected to generate 0.86 times more return on investment than Australian Unity. However, Vicinity Centres Re is 1.16 times less risky than Australian Unity. It trades about 0.05 of its potential returns per unit of risk. Australian Unity Office is currently generating about -0.2 per unit of risk. If you would invest 217.00 in Vicinity Centres Re on August 28, 2024 and sell it today you would earn a total of 2.00 from holding Vicinity Centres Re or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vicinity Centres Re vs. Australian Unity Office
Performance |
| Timeline |
| Vicinity Centres |
| Australian Unity Office |
Vicinity Centres and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vicinity Centres and Australian Unity
The main advantage of trading using opposite Vicinity Centres and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicinity Centres position performs unexpectedly, Australian Unity 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 Australian Unity will offset losses from the drop in Australian Unity's long position.| Vicinity Centres vs. Bank of Queensland | Vicinity Centres vs. Commonwealth Bank of | Vicinity Centres vs. Red Hill Iron | Vicinity Centres vs. Bisalloy Steel Group |
| Australian Unity vs. Clime Investment Management | Australian Unity vs. ACDC Metals | Australian Unity vs. Group 6 Metals | Australian Unity vs. Neurotech International |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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