Correlation Between Perpetual Credit and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Perpetual Credit and Southern Cross 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 Perpetual Credit and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perpetual Credit Income and Southern Cross Gold, you can compare the effects of market volatilities on Perpetual Credit and Southern Cross 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 Perpetual Credit with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perpetual Credit and Southern Cross.
Diversification Opportunities for Perpetual Credit and Southern Cross
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Perpetual and Southern is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Perpetual Credit Income and Southern Cross Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Gold and Perpetual Credit 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 Perpetual Credit Income are associated (or correlated) with Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Gold has no effect on the direction of Perpetual Credit i.e., Perpetual Credit and Southern Cross go up and down completely randomly.
Pair Corralation between Perpetual Credit and Southern Cross
Assuming the 90 days trading horizon Perpetual Credit is expected to generate 13.01 times less return on investment than Southern Cross. But when comparing it to its historical volatility, Perpetual Credit Income is 5.49 times less risky than Southern Cross. It trades about 0.07 of its potential returns per unit of risk. Southern Cross Gold is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 275.00 in Southern Cross Gold on September 14, 2024 and sell it today you would earn a total of 141.00 from holding Southern Cross Gold or generate 51.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Perpetual Credit Income vs. Southern Cross Gold
Performance |
Timeline |
Perpetual Credit Income |
Southern Cross Gold |
Perpetual Credit and Southern Cross Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Perpetual Credit and Southern Cross
The main advantage of trading using opposite Perpetual Credit and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perpetual Credit position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.Perpetual Credit vs. Diversified United Investment | Perpetual Credit vs. K2 Asset Management | Perpetual Credit vs. Argo Investments | Perpetual Credit vs. BKI Investment |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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