Correlation Between Australian Unity and Legacy Iron
Can any of the company-specific risk be diversified away by investing in both Australian Unity 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 Australian Unity and Legacy Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Unity Office and Legacy Iron Ore, you can compare the effects of market volatilities on Australian Unity 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 Australian Unity with a short position of Legacy Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Legacy Iron.
Diversification Opportunities for Australian Unity and Legacy Iron
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Australian and Legacy is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office 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 Australian Unity 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 Australian Unity Office 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 Australian Unity i.e., Australian Unity and Legacy Iron go up and down completely randomly.
Pair Corralation between Australian Unity and Legacy Iron
Assuming the 90 days trading horizon Australian Unity Office is expected to generate 0.38 times more return on investment than Legacy Iron. However, Australian Unity Office is 2.61 times less risky than Legacy Iron. It trades about 0.02 of its potential returns per unit of risk. Legacy Iron Ore is currently generating about -0.01 per unit of risk. If you would invest 102.00 in Australian Unity Office on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Australian Unity Office or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Legacy Iron Ore
Performance |
| Timeline |
| Australian Unity Office |
| Legacy Iron Ore |
Australian Unity and Legacy Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Legacy Iron
The main advantage of trading using opposite Australian Unity and Legacy Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity 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.| Australian Unity vs. GDI Property Group | Australian Unity vs. Champion Iron | Australian Unity vs. iShares Global Healthcare | Australian Unity vs. Peel Mining |
| Legacy Iron vs. Northern Star Resources | Legacy Iron vs. Evolution Mining | Legacy Iron vs. Bluescope Steel | Legacy Iron vs. Aneka Tambang Tbk |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |