Correlation Between Atalaya Mining and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Atalaya Mining and Rio Tinto 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 Atalaya Mining and Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atalaya Mining and Rio Tinto PLC, you can compare the effects of market volatilities on Atalaya Mining and Rio Tinto 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 Atalaya Mining with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atalaya Mining and Rio Tinto.
Diversification Opportunities for Atalaya Mining and Rio Tinto
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Atalaya and Rio is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Atalaya Mining and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto PLC and Atalaya Mining 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 Atalaya Mining are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Atalaya Mining i.e., Atalaya Mining and Rio Tinto go up and down completely randomly.
Pair Corralation between Atalaya Mining and Rio Tinto
Assuming the 90 days trading horizon Atalaya Mining is expected to generate 1.55 times more return on investment than Rio Tinto. However, Atalaya Mining is 1.55 times more volatile than Rio Tinto PLC. It trades about 0.02 of its potential returns per unit of risk. Rio Tinto PLC is currently generating about -0.01 per unit of risk. If you would invest 30,546 in Atalaya Mining on September 23, 2024 and sell it today you would earn a total of 2,804 from holding Atalaya Mining or generate 9.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atalaya Mining vs. Rio Tinto PLC
Performance |
| Timeline |
| Atalaya Mining |
| Rio Tinto PLC |
Atalaya Mining and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atalaya Mining and Rio Tinto
The main advantage of trading using opposite Atalaya Mining and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atalaya Mining position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Atalaya Mining vs. Grand Vision Media | Atalaya Mining vs. Centaur Media | Atalaya Mining vs. Universal Health Services | Atalaya Mining vs. Schroders Investment Trusts |
| Rio Tinto vs. Givaudan SA | Rio Tinto vs. Antofagasta PLC | Rio Tinto vs. Ferrexpo PLC | Rio Tinto vs. Atalaya 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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