Correlation Between Altair International and Iluka Resources
Can any of the company-specific risk be diversified away by investing in both Altair International and Iluka Resources 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 Altair International and Iluka Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altair International Corp and Iluka Resources Ltd, you can compare the effects of market volatilities on Altair International and Iluka Resources 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 Altair International with a short position of Iluka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altair International and Iluka Resources.
Diversification Opportunities for Altair International and Iluka Resources
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Altair and Iluka is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Altair International Corp and Iluka Resources Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iluka Resources and Altair International 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 Altair International Corp are associated (or correlated) with Iluka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iluka Resources has no effect on the direction of Altair International i.e., Altair International and Iluka Resources go up and down completely randomly.
Pair Corralation between Altair International and Iluka Resources
Given the investment horizon of 90 days Altair International Corp is expected to generate 13.89 times more return on investment than Iluka Resources. However, Altair International is 13.89 times more volatile than Iluka Resources Ltd. It trades about 0.06 of its potential returns per unit of risk. Iluka Resources Ltd is currently generating about 0.02 per unit of risk. If you would invest 3.20 in Altair International Corp on October 13, 2024 and sell it today you would lose (0.12) from holding Altair International Corp or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altair International Corp vs. Iluka Resources Ltd
Performance |
| Timeline |
| Altair International Corp |
| Iluka Resources |
Altair International and Iluka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altair International and Iluka Resources
The main advantage of trading using opposite Altair International and Iluka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altair International position performs unexpectedly, Iluka Resources 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 Iluka Resources will offset losses from the drop in Iluka Resources' long position.| Altair International vs. Atco Mining | Altair International vs. Bitterroot Resources | Altair International vs. Avarone Metals | Altair International vs. Huntsman Exploration |
| Iluka Resources vs. ERAMET SA | Iluka Resources vs. Giyani Metals Corp | Iluka Resources vs. IGO Limited | Iluka Resources vs. Grid Metals Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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