Correlation Between Duxton Broadacre and Dexus Convenience

Can any of the company-specific risk be diversified away by investing in both Duxton Broadacre and Dexus Convenience 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 Duxton Broadacre and Dexus Convenience into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Duxton Broadacre Farms and Dexus Convenience Retail, you can compare the effects of market volatilities on Duxton Broadacre and Dexus Convenience 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 Duxton Broadacre with a short position of Dexus Convenience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duxton Broadacre and Dexus Convenience.

Diversification Opportunities for Duxton Broadacre and Dexus Convenience

0.35

Correlation Coefficient

Duxton Broadacre  Dexus Convenience

Weak diversification

The 3 months correlation between Duxton and Dexus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Duxton Broadacre Farms and Dexus Convenience Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Convenience Retail and Duxton Broadacre 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 Duxton Broadacre Farms are associated (or correlated) with Dexus Convenience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Convenience Retail has no effect on the direction of Duxton Broadacre i.e., Duxton Broadacre and Dexus Convenience go up and down completely randomly.

Pair Corralation between Duxton Broadacre and Dexus Convenience

Assuming the 90 days trading horizon Duxton Broadacre Farms is expected to under-perform the Dexus Convenience. In addition to that, Duxton Broadacre is 1.53 times more volatile than Dexus Convenience Retail. It trades about -0.03 of its total potential returns per unit of risk. Dexus Convenience Retail is currently generating about 0.03 per unit of volatility. If you would invest  286.00  in Dexus Convenience Retail on December 5, 2024 and sell it today you would earn a total of  5.00  from holding Dexus Convenience Retail or generate 1.75% return on investment over 90 days.

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

Duxton Broadacre Farms  vs.  Dexus Convenience Retail

Duxton Broadacre Farms

Risk-Adjusted Performance

Very Weak

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

Dexus Convenience Retail

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dexus Convenience Retail are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Dexus Convenience 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 Duxton Broadacre and Dexus Convenience

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

The idea behind Duxton Broadacre Farms and Dexus Convenience Retail 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.