Correlation Between Perpetual Credit and Latitude Financial
Can any of the company-specific risk be diversified away by investing in both Perpetual Credit and Latitude Financial 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 Perpetual Credit and Latitude Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perpetual Credit Income and Latitude Financial Services, you can compare the effects of market volatilities on Perpetual Credit and Latitude Financial 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 Perpetual Credit with a short position of Latitude Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perpetual Credit and Latitude Financial.
Diversification Opportunities for Perpetual Credit and Latitude Financial
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Perpetual and Latitude is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Perpetual Credit Income and Latitude Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latitude Financial and Perpetual Credit 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 Perpetual Credit Income are associated (or correlated) with Latitude Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latitude Financial has no effect on the direction of Perpetual Credit i.e., Perpetual Credit and Latitude Financial go up and down completely randomly.
Pair Corralation between Perpetual Credit and Latitude Financial
Assuming the 90 days trading horizon Perpetual Credit is expected to generate 5.2 times less return on investment than Latitude Financial. In addition to that, Perpetual Credit is 1.47 times more volatile than Latitude Financial Services. It trades about 0.01 of its total potential returns per unit of risk. Latitude Financial Services is currently generating about 0.05 per unit of volatility. If you would invest 112.00 in Latitude Financial Services on December 30, 2024 and sell it today you would earn a total of 3.00 from holding Latitude Financial Services or generate 2.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Perpetual Credit Income vs. Latitude Financial Services
Performance |
Timeline |
Perpetual Credit Income |
Latitude Financial |
Perpetual Credit and Latitude Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Perpetual Credit and Latitude Financial
The main advantage of trading using opposite Perpetual Credit and Latitude Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perpetual Credit position performs unexpectedly, Latitude Financial 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 Latitude Financial will offset losses from the drop in Latitude Financial's long position.Perpetual Credit vs. Dexus Convenience Retail | Perpetual Credit vs. Mayfield Childcare | Perpetual Credit vs. Computershare | Perpetual Credit vs. Nufarm Finance NZ |
Latitude Financial vs. MotorCycle Holdings | Latitude Financial vs. Aeris Environmental | Latitude Financial vs. G8 Education | Latitude Financial vs. Collins Foods |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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