Correlation Between SPASX Dividend and Southern Cross

Can any of the company-specific risk be diversified away by investing in both SPASX Dividend and Southern Cross 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 SPASX Dividend and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SPASX Dividend Opportunities and Southern Cross Media, you can compare the effects of market volatilities on SPASX Dividend and Southern Cross 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 SPASX Dividend with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPASX Dividend and Southern Cross.

Diversification Opportunities for SPASX Dividend and Southern Cross

-0.04

Correlation Coefficient

SPASX Dividend  Southern Cross

Good diversification

The 3 months correlation between SPASX and Southern is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding SPASX Dividend Opportunities and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media and SPASX Dividend 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 SPASX Dividend Opportunities are associated (or correlated) with Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Media has no effect on the direction of SPASX Dividend i.e., SPASX Dividend and Southern Cross go up and down completely randomly.

Pair Corralation between SPASX Dividend and Southern Cross

Assuming the 90 days trading horizon SPASX Dividend is expected to generate 109.45 times less return on investment than Southern Cross. But when comparing it to its historical volatility, SPASX Dividend Opportunities is 5.41 times less risky than Southern Cross. It trades about 0.01 of its potential returns per unit of risk. Southern Cross Media is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Southern Cross Media on October 8, 2024 and sell it today you would earn a total of  14.00  from holding Southern Cross Media or generate 29.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SPASX Dividend Opportunities  vs.  Southern Cross Media

Pair Trading with SPASX Dividend and Southern Cross

The main advantage of trading using opposite SPASX Dividend and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPASX Dividend position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.

The idea behind SPASX Dividend Opportunities and Southern Cross Media 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.