Correlation Between Scentre and Vicinity Centres

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

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

Diversification Opportunities for Scentre and Vicinity Centres

0.78

Correlation Coefficient

Scentre  Vicinity Centres

Poor diversification

The 3 months correlation between Scentre and Vicinity is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Scentre Group and Vicinity Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres and Scentre 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 Scentre Group are associated (or correlated) with Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Scentre i.e., Scentre and Vicinity Centres go up and down completely randomly.

Pair Corralation between Scentre and Vicinity Centres

Assuming the 90 days trading horizon Scentre is expected to generate 1.07 times less return on investment than Vicinity Centres. But when comparing it to its historical volatility, Scentre Group is 1.09 times less risky than Vicinity Centres. It trades about 0.11 of its potential returns per unit of risk. Vicinity Centres is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Vicinity Centres on April 23, 2025 and sell it today you would earn a total of  17.00  from holding Vicinity Centres or generate 7.33% return on investment over 90 days.

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

Scentre Group  vs.  Vicinity Centres

Scentre Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Scentre Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Scentre may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Vicinity Centres

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vicinity Centres are ranked lower than 8 (%) 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 August 2025.

Pair Trading with Scentre and Vicinity Centres

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

The idea behind Scentre Group and Vicinity Centres 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.