Correlation Between New Zealand and Shopping Centres

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

By analyzing existing cross correlation between New Zealand Oil and Shopping Centres Australasia, you can compare the effects of market volatilities on New Zealand and Shopping 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 New Zealand with a short position of Shopping Centres. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Zealand and Shopping Centres.

Diversification Opportunities for New Zealand and Shopping Centres

0.0

Correlation Coefficient

New Zealand  Shopping Centres

Pay attention - limited upside

The 3 months correlation between New and Shopping is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding New Zealand Oil and Shopping Centres Australasia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shopping Centres Aus and New Zealand 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 New Zealand Oil are associated (or correlated) with Shopping Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shopping Centres Aus has no effect on the direction of New Zealand i.e., New Zealand and Shopping Centres go up and down completely randomly.

Pair Corralation between New Zealand and Shopping Centres

If you would invest (100.00) in Shopping Centres Australasia on September 3, 2024 and sell it today you would earn a total of  100.00  from holding Shopping Centres Australasia or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

New Zealand Oil  vs.  Shopping Centres Australasia

New Zealand Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Zealand Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, New Zealand is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Shopping Centres Aus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shopping Centres Australasia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Shopping Centres is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with New Zealand and Shopping Centres

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

The idea behind New Zealand Oil and Shopping Centres Australasia 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.