Correlation Between ARISTOCRAT LEISURE and Aristocrat Leisure
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE and Aristocrat Leisure 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 ARISTOCRAT LEISURE and Aristocrat Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Aristocrat Leisure Limited, you can compare the effects of market volatilities on ARISTOCRAT LEISURE and Aristocrat Leisure 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 ARISTOCRAT LEISURE with a short position of Aristocrat Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Aristocrat Leisure.
Diversification Opportunities for ARISTOCRAT LEISURE and Aristocrat Leisure
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between ARISTOCRAT and Aristocrat is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Aristocrat Leisure Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristocrat Leisure and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE are associated (or correlated) with Aristocrat Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristocrat Leisure has no effect on the direction of ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Aristocrat Leisure go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Aristocrat Leisure
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 1.1 times less return on investment than Aristocrat Leisure. But when comparing it to its historical volatility, ARISTOCRAT LEISURE is 1.62 times less risky than Aristocrat Leisure. It trades about 0.15 of its potential returns per unit of risk. Aristocrat Leisure Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,806 in Aristocrat Leisure Limited on October 9, 2024 and sell it today you would earn a total of 2,374 from holding Aristocrat Leisure Limited or generate 131.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
ARISTOCRAT LEISURE vs. Aristocrat Leisure Limited
Performance |
Timeline |
ARISTOCRAT LEISURE |
Aristocrat Leisure |
ARISTOCRAT LEISURE and Aristocrat Leisure Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ARISTOCRAT LEISURE and Aristocrat Leisure
The main advantage of trading using opposite ARISTOCRAT LEISURE and Aristocrat Leisure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE position performs unexpectedly, Aristocrat Leisure 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 Aristocrat Leisure will offset losses from the drop in Aristocrat Leisure's long position.ARISTOCRAT LEISURE vs. Motorcar Parts of | ARISTOCRAT LEISURE vs. GEAR4MUSIC LS 10 | ARISTOCRAT LEISURE vs. CarsalesCom | ARISTOCRAT LEISURE vs. Geely Automobile Holdings |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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