Correlation Between Suncorp and Brickworks
Can any of the company-specific risk be diversified away by investing in both Suncorp and Brickworks 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 Suncorp and Brickworks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suncorp Group and Brickworks, you can compare the effects of market volatilities on Suncorp and Brickworks 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 Suncorp with a short position of Brickworks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suncorp and Brickworks.
Diversification Opportunities for Suncorp and Brickworks
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Suncorp and Brickworks is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Suncorp Group and Brickworks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brickworks and Suncorp 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 Suncorp Group are associated (or correlated) with Brickworks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickworks has no effect on the direction of Suncorp i.e., Suncorp and Brickworks go up and down completely randomly.
Pair Corralation between Suncorp and Brickworks
Assuming the 90 days trading horizon Suncorp Group is expected to under-perform the Brickworks. In addition to that, Suncorp is 1.75 times more volatile than Brickworks. It trades about -0.07 of its total potential returns per unit of risk. Brickworks is currently generating about -0.05 per unit of volatility. If you would invest 2,590 in Brickworks on December 29, 2024 and sell it today you would lose (143.00) from holding Brickworks or give up 5.52% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
Suncorp Group vs. Brickworks
Performance |
Timeline |
Suncorp Group |
Brickworks |
Suncorp and Brickworks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Suncorp and Brickworks
The main advantage of trading using opposite Suncorp and Brickworks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suncorp position performs unexpectedly, Brickworks 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 Brickworks will offset losses from the drop in Brickworks' long position.Suncorp vs. Rural Funds Group | Suncorp vs. Bluescope Steel | Suncorp vs. Australian United Investment | Suncorp vs. Argo Investments |
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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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