Correlation Between Xero and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Xero and Charter Hall 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 Xero and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xero and Charter Hall Retail, you can compare the effects of market volatilities on Xero and Charter Hall 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 Xero with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xero and Charter Hall.
Diversification Opportunities for Xero and Charter Hall
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xero and Charter is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Xero and Charter Hall Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Retail and Xero 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 Xero are associated (or correlated) with Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Retail has no effect on the direction of Xero i.e., Xero and Charter Hall go up and down completely randomly.
Pair Corralation between Xero and Charter Hall
Assuming the 90 days trading horizon Xero is expected to generate 1.68 times more return on investment than Charter Hall. However, Xero is 1.68 times more volatile than Charter Hall Retail. It trades about 0.41 of its potential returns per unit of risk. Charter Hall Retail is currently generating about 0.02 per unit of risk. If you would invest 15,115 in Xero on August 28, 2024 and sell it today you would earn a total of 2,335 from holding Xero or generate 15.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xero vs. Charter Hall Retail
Performance |
| Timeline |
| Xero |
| Charter Hall Retail |
Xero and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xero and Charter Hall
The main advantage of trading using opposite Xero and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xero position performs unexpectedly, Charter Hall 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 Charter Hall will offset losses from the drop in Charter Hall's long position.| Xero vs. Bailador Technology Invest | Xero vs. Autosports Group | Xero vs. Infomedia | Xero vs. National Storage REIT |
| Charter Hall vs. Cromwell Property Group | Charter Hall vs. GDI Property Group | Charter Hall vs. Australian Unity Office |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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