Correlation Between Brickworks and Hub24
Can any of the company-specific risk be diversified away by investing in both Brickworks and Hub24 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 Brickworks and Hub24 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brickworks and Hub24, you can compare the effects of market volatilities on Brickworks and Hub24 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 Brickworks with a short position of Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brickworks and Hub24.
Diversification Opportunities for Brickworks and Hub24
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Brickworks and Hub24 is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brickworks and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 and Brickworks 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 Brickworks are associated (or correlated) with Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of Brickworks i.e., Brickworks and Hub24 go up and down completely randomly.
Pair Corralation between Brickworks and Hub24
Assuming the 90 days trading horizon Brickworks is expected to under-perform the Hub24. But the stock apears to be less risky and, when comparing its historical volatility, Brickworks is 1.86 times less risky than Hub24. The stock trades about -0.16 of its potential returns per unit of risk. The Hub24 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,988 in Hub24 on October 4, 2024 and sell it today you would earn a total of 972.00 from holding Hub24 or generate 16.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Brickworks vs. Hub24
Performance |
Timeline |
Brickworks |
Hub24 |
Brickworks and Hub24 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brickworks and Hub24
The main advantage of trading using opposite Brickworks and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brickworks position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.Brickworks vs. Centrex Metals | Brickworks vs. Neurotech International | Brickworks vs. Readytech Holdings | Brickworks vs. Regis Healthcare |
Hub24 vs. Westpac Banking | Hub24 vs. Ecofibre | Hub24 vs. iShares Global Healthcare | Hub24 vs. Australian Dairy Farms |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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