Correlation Between Vicinity Centres and Eureka Group
Can any of the company-specific risk be diversified away by investing in both Vicinity Centres and Eureka Group 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 Eureka Group 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 Eureka Group Holdings, you can compare the effects of market volatilities on Vicinity Centres and Eureka Group 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 Eureka Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vicinity Centres and Eureka Group.
Diversification Opportunities for Vicinity Centres and Eureka Group
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vicinity and Eureka is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Centres Re and Eureka Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Group Holdings 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 Eureka Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Group Holdings has no effect on the direction of Vicinity Centres i.e., Vicinity Centres and Eureka Group go up and down completely randomly.
Pair Corralation between Vicinity Centres and Eureka Group
Assuming the 90 days trading horizon Vicinity Centres Re is expected to generate 1.05 times more return on investment than Eureka Group. However, Vicinity Centres is 1.05 times more volatile than Eureka Group Holdings. It trades about 0.2 of its potential returns per unit of risk. Eureka Group Holdings is currently generating about -0.19 per unit of risk. If you would invest 208.00 in Vicinity Centres Re on November 28, 2024 and sell it today you would earn a total of 11.00 from holding Vicinity Centres Re or generate 5.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vicinity Centres Re vs. Eureka Group Holdings
Performance |
| Timeline |
| Vicinity Centres |
| Eureka Group Holdings |
Vicinity Centres and Eureka Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vicinity Centres and Eureka Group
The main advantage of trading using opposite Vicinity Centres and Eureka Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vicinity Centres position performs unexpectedly, Eureka Group 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 Eureka Group will offset losses from the drop in Eureka Group's long position.| Vicinity Centres vs. Aussie Broadband | Vicinity Centres vs. Hutchison Telecommunications | Vicinity Centres vs. Southern Cross Media | Vicinity Centres vs. Global Data Centre |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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