Correlation Between Scentre Group and Vicinity Centres

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

By analyzing existing cross correlation between Scentre Group and Vicinity Centres Re, you can compare the effects of market volatilities on Scentre Group and Vicinity 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 Scentre Group with a short position of Vicinity Centres. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scentre Group and Vicinity Centres.

Diversification Opportunities for Scentre Group and Vicinity Centres

0.28

Correlation Coefficient

Scentre Group  Vicinity Centres

Modest diversification

The 3 months correlation between Scentre and Vicinity is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Scentre Group and Vicinity Centres Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres and Scentre Group 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 Scentre Group are associated (or correlated) with Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Scentre Group i.e., Scentre Group and Vicinity Centres go up and down completely randomly.

Pair Corralation between Scentre Group and Vicinity Centres

Assuming the 90 days trading horizon Scentre Group is expected to generate 12.38 times less return on investment than Vicinity Centres. In addition to that, Scentre Group is 1.14 times more volatile than Vicinity Centres Re. It trades about 0.01 of its total potential returns per unit of risk. Vicinity Centres Re is currently generating about 0.14 per unit of volatility. If you would invest  205.00  in Vicinity Centres Re on December 28, 2024 and sell it today you would earn a total of  18.00  from holding Vicinity Centres Re or generate 8.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Scentre Group  vs.  Vicinity Centres Re

Scentre Group

Risk-Adjusted Performance

Very Weak

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

Vicinity Centres

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vicinity Centres Re are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vicinity Centres may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Scentre Group and Vicinity Centres

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

The idea behind Scentre Group and Vicinity Centres Re 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.