Correlation Between Collins Foods and Vicinity Centres

Can any of the company-specific risk be diversified away by investing in both Collins Foods and Vicinity Centres 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 Collins Foods and Vicinity Centres into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Collins Foods and Vicinity Centres Re, you can compare the effects of market volatilities on Collins Foods and Vicinity Centres 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 Collins Foods with a short position of Vicinity Centres. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Vicinity Centres.

Diversification Opportunities for Collins Foods and Vicinity Centres

0.68

Correlation Coefficient

Collins Foods  Vicinity Centres

Poor diversification

The 3 months correlation between Collins and Vicinity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Vicinity Centres Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres and Collins Foods 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 Collins Foods are associated (or correlated) with Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Collins Foods i.e., Collins Foods and Vicinity Centres go up and down completely randomly.

Pair Corralation between Collins Foods and Vicinity Centres

Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Vicinity Centres. In addition to that, Collins Foods is 1.03 times more volatile than Vicinity Centres Re. It trades about -0.34 of its total potential returns per unit of risk. Vicinity Centres Re is currently generating about 0.08 per unit of volatility. If you would invest  213.00  in Vicinity Centres Re on October 7, 2024 and sell it today you would earn a total of  3.00  from holding Vicinity Centres Re or generate 1.41% return on investment over 90 days.

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

Collins Foods  vs.  Vicinity Centres Re

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Collins Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Vicinity Centres

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vicinity Centres Re has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vicinity Centres is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Collins Foods and Vicinity Centres

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

The idea behind Collins Foods and Vicinity Centres Re 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.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.