Correlation Between Australia and Legacy Iron
Can any of the company-specific risk be diversified away by investing in both Australia 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 Australia and Legacy Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australia and New and Legacy Iron Ore, you can compare the effects of market volatilities on Australia 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 Australia with a short position of Legacy Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australia and Legacy Iron.
Diversification Opportunities for Australia and Legacy Iron
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Australia and Legacy is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Australia and New 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 Australia 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 Australia and New 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 Australia i.e., Australia and Legacy Iron go up and down completely randomly.
Pair Corralation between Australia and Legacy Iron
Assuming the 90 days trading horizon Australia and New is expected to generate 0.31 times more return on investment than Legacy Iron. However, Australia and New is 3.27 times less risky than Legacy Iron. It trades about 0.26 of its potential returns per unit of risk. Legacy Iron Ore is currently generating about 0.02 per unit of risk. If you would invest 2,860 in Australia and New on October 24, 2024 and sell it today you would earn a total of 155.00 from holding Australia and New or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australia and New vs. Legacy Iron Ore
Performance |
| Timeline |
| Australia and New |
| Legacy Iron Ore |
Australia and Legacy Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australia and Legacy Iron
The main advantage of trading using opposite Australia and Legacy Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australia 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.| Australia vs. Legacy Iron Ore | Australia vs. Lendlease Group | Australia vs. Champion Iron | Australia vs. Southern Cross Media |
| Legacy Iron vs. Northern Star Resources | Legacy Iron vs. Evolution Mining | Legacy Iron vs. Bluescope Steel | Legacy Iron vs. De Grey Mining |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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