Correlation Between London City and Super Retail
Can any of the company-specific risk be diversified away by investing in both London City and Super Retail 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 London City and Super Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London City Equities and Super Retail Group, you can compare the effects of market volatilities on London City and Super Retail 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 London City with a short position of Super Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of London City and Super Retail.
Diversification Opportunities for London City and Super Retail
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between London and Super is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding London City Equities and Super Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Retail Group and London City 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 London City Equities are associated (or correlated) with Super Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Retail Group has no effect on the direction of London City i.e., London City and Super Retail go up and down completely randomly.
Pair Corralation between London City and Super Retail
Assuming the 90 days trading horizon London City Equities is expected to generate 0.55 times more return on investment than Super Retail. However, London City Equities is 1.81 times less risky than Super Retail. It trades about 0.36 of its potential returns per unit of risk. Super Retail Group is currently generating about -0.02 per unit of risk. If you would invest 73.00 in London City Equities on October 24, 2024 and sell it today you would earn a total of 14.00 from holding London City Equities or generate 19.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
London City Equities vs. Super Retail Group
Performance |
Timeline |
London City Equities |
Super Retail Group |
London City and Super Retail Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with London City and Super Retail
The main advantage of trading using opposite London City and Super Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London City position performs unexpectedly, Super Retail 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 Super Retail will offset losses from the drop in Super Retail's long position.London City vs. Jupiter Energy | London City vs. WA1 Resources | London City vs. Predictive Discovery | London City vs. Mindax Limited |
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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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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