Correlation Between Super Retail and Rubicon Water

Can any of the company-specific risk be diversified away by investing in both Super Retail and Rubicon Water 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 Super Retail and Rubicon Water into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Super Retail and Rubicon Water

0.59

Correlation Coefficient

Super Retail  Rubicon Water

Very weak diversification

The 3 months correlation between Super and Rubicon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Super Retail Group and Rubicon Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubicon Water and Super Retail 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 Super Retail Group are associated (or correlated) with Rubicon Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubicon Water has no effect on the direction of Super Retail i.e., Super Retail and Rubicon Water go up and down completely randomly.

Pair Corralation between Super Retail and Rubicon Water

Assuming the 90 days trading horizon Super Retail Group is expected to under-perform the Rubicon Water. But the stock apears to be less risky and, when comparing its historical volatility, Super Retail Group is 2.66 times less risky than Rubicon Water. The stock trades about -0.1 of its potential returns per unit of risk. The Rubicon Water is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Rubicon Water on December 30, 2024 and sell it today you would lose (1.00) from holding Rubicon Water or give up 3.45% of portfolio value over 90 days.

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

Super Retail Group  vs.  Rubicon Water

Super Retail Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Super Retail Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rubicon Water

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rubicon Water are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Rubicon Water is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Super Retail and Rubicon Water

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

The idea behind Super Retail Group and Rubicon Water 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.