Correlation Between EQT AB and LEGACY IRON
Can any of the company-specific risk be diversified away by investing in both EQT AB and LEGACY IRON 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 EQT AB and LEGACY IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQT AB and LEGACY IRON ORE, you can compare the effects of market volatilities on EQT AB and LEGACY IRON 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 EQT AB with a short position of LEGACY IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQT AB and LEGACY IRON.
Diversification Opportunities for EQT AB and LEGACY IRON
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EQT and LEGACY is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and LEGACY IRON ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGACY IRON ORE and EQT AB 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 EQT AB are associated (or correlated) with LEGACY IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGACY IRON ORE has no effect on the direction of EQT AB i.e., EQT AB and LEGACY IRON go up and down completely randomly.
Pair Corralation between EQT AB and LEGACY IRON
Assuming the 90 days horizon EQT AB is expected to generate 1.9 times more return on investment than LEGACY IRON. However, EQT AB is 1.9 times more volatile than LEGACY IRON ORE. It trades about 0.01 of its potential returns per unit of risk. LEGACY IRON ORE is currently generating about -0.12 per unit of risk. If you would invest 2,811 in EQT AB on September 2, 2024 and sell it today you would lose (14.00) from holding EQT AB or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.48% |
| Values | Daily Returns |
EQT AB vs. LEGACY IRON ORE
Performance |
| Timeline |
| EQT AB |
| LEGACY IRON ORE |
EQT AB and LEGACY IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQT AB and LEGACY IRON
The main advantage of trading using opposite EQT AB and LEGACY IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB position performs unexpectedly, LEGACY IRON 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 LEGACY IRON will offset losses from the drop in LEGACY IRON's long position.| EQT AB vs. Ameriprise Financial | EQT AB vs. Ares Management Corp | EQT AB vs. Superior Plus Corp | EQT AB vs. NMI Holdings |
| LEGACY IRON vs. SIVERS SEMICONDUCTORS AB | LEGACY IRON vs. Darden Restaurants | LEGACY IRON vs. Reliance Steel Aluminum | LEGACY IRON vs. Q2M Managementberatung AG |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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