Correlation Between Alto Metals and Woolworths
Can any of the company-specific risk be diversified away by investing in both Alto Metals and Woolworths 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 Alto Metals and Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alto Metals and Woolworths, you can compare the effects of market volatilities on Alto Metals and Woolworths 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 Alto Metals with a short position of Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alto Metals and Woolworths.
Diversification Opportunities for Alto Metals and Woolworths
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alto and Woolworths is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Alto Metals and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths and Alto Metals 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 Alto Metals are associated (or correlated) with Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of Alto Metals i.e., Alto Metals and Woolworths go up and down completely randomly.
Pair Corralation between Alto Metals and Woolworths
Assuming the 90 days trading horizon Alto Metals is expected to generate 6.05 times more return on investment than Woolworths. However, Alto Metals is 6.05 times more volatile than Woolworths. It trades about 0.07 of its potential returns per unit of risk. Woolworths is currently generating about -0.03 per unit of risk. If you would invest 4.50 in Alto Metals on September 14, 2024 and sell it today you would earn a total of 4.90 from holding Alto Metals or generate 108.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alto Metals vs. Woolworths
Performance |
| Timeline |
| Alto Metals |
| Woolworths |
Alto Metals and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alto Metals and Woolworths
The main advantage of trading using opposite Alto Metals and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alto Metals position performs unexpectedly, Woolworths 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 Woolworths will offset losses from the drop in Woolworths' long position.| Alto Metals vs. Magellan Financial Group | Alto Metals vs. Galena Mining | Alto Metals vs. Ora Banda Mining | Alto Metals vs. Commonwealth Bank of |
| Woolworths vs. Dalaroo Metals | Woolworths vs. Farm Pride Foods | Woolworths vs. Centuria Industrial Reit | Woolworths vs. Alto Metals |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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