Correlation Between Dexus Convenience and Zenith Minerals

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

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

Diversification Opportunities for Dexus Convenience and Zenith Minerals

0.35

Correlation Coefficient

Dexus Convenience  Zenith Minerals

Weak diversification

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

Pair Corralation between Dexus Convenience and Zenith Minerals

Assuming the 90 days trading horizon Dexus Convenience Retail is expected to generate 0.41 times more return on investment than Zenith Minerals. However, Dexus Convenience Retail is 2.47 times less risky than Zenith Minerals. It trades about 0.08 of its potential returns per unit of risk. Zenith Minerals is currently generating about -0.15 per unit of risk. If you would invest  290.00  in Dexus Convenience Retail on October 4, 2024 and sell it today you would earn a total of  4.00  from holding Dexus Convenience Retail or generate 1.38% return on investment over 90 days.

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

Dexus Convenience Retail  vs.  Zenith Minerals

Dexus Convenience Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dexus Convenience Retail has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Zenith Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zenith Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Dexus Convenience and Zenith Minerals

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

The idea behind Dexus Convenience Retail and Zenith Minerals 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.