Correlation Between Vicinity Centres and Dexus Property

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

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

Diversification Opportunities for Vicinity Centres and Dexus Property

0.81

Correlation Coefficient

Vicinity Centres  Dexus Property

Very poor diversification

The 3 months correlation between Vicinity and Dexus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vicinity Centres Re and Dexus Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexus Property Group and Vicinity Centres 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 Vicinity Centres Re are associated (or correlated) with Dexus Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexus Property Group has no effect on the direction of Vicinity Centres i.e., Vicinity Centres and Dexus Property go up and down completely randomly.

Pair Corralation between Vicinity Centres and Dexus Property

Assuming the 90 days trading horizon Vicinity Centres Re is expected to generate 0.73 times more return on investment than Dexus Property. However, Vicinity Centres Re is 1.37 times less risky than Dexus Property. It trades about 0.14 of its potential returns per unit of risk. Dexus Property Group is currently generating about 0.07 per unit of risk. If you would invest  205.00  in Vicinity Centres Re on December 29, 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	Strong
Accuracy	98.44%
Values	Daily Returns

Vicinity Centres Re  vs.  Dexus Property Group

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.

Dexus Property Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dexus Property Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dexus Property may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vicinity Centres and Dexus Property

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

The idea behind Vicinity Centres Re and Dexus Property Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.