Correlation Between Dairy Farm and Mirvac
Can any of the company-specific risk be diversified away by investing in both Dairy Farm and Mirvac 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 Dairy Farm and Mirvac into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Mirvac Group, you can compare the effects of market volatilities on Dairy Farm and Mirvac 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 Dairy Farm with a short position of Mirvac. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Mirvac.
Diversification Opportunities for Dairy Farm and Mirvac
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dairy and Mirvac is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International and Mirvac Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirvac Group and Dairy Farm 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 Dairy Farm International are associated (or correlated) with Mirvac. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirvac Group has no effect on the direction of Dairy Farm i.e., Dairy Farm and Mirvac go up and down completely randomly.
Pair Corralation between Dairy Farm and Mirvac
Assuming the 90 days trading horizon Dairy Farm International is expected to generate 2.44 times more return on investment than Mirvac. However, Dairy Farm is 2.44 times more volatile than Mirvac Group. It trades about 0.12 of its potential returns per unit of risk. Mirvac Group is currently generating about -0.14 per unit of risk. If you would invest 170.00 in Dairy Farm International on September 26, 2024 and sell it today you would earn a total of 48.00 from holding Dairy Farm International or generate 28.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Dairy Farm International vs. Mirvac Group
Performance |
Timeline |
Dairy Farm International |
Mirvac Group |
Dairy Farm and Mirvac Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dairy Farm and Mirvac
The main advantage of trading using opposite Dairy Farm and Mirvac positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm position performs unexpectedly, Mirvac 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 Mirvac will offset losses from the drop in Mirvac's long position.Dairy Farm vs. SEVENI HLDGS UNSPADR12 | Dairy Farm vs. Seven i Holdings | Dairy Farm vs. The Kroger Co | Dairy Farm vs. Koninklijke Ahold Delhaize |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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