Correlation Between SPASX Dividend and Firetail Resources
Can any of the company-specific risk be diversified away by investing in both SPASX Dividend and Firetail 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 SPASX Dividend and Firetail Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPASX Dividend Opportunities and Firetail Resources, you can compare the effects of market volatilities on SPASX Dividend and Firetail 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 SPASX Dividend with a short position of Firetail Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPASX Dividend and Firetail Resources.
Diversification Opportunities for SPASX Dividend and Firetail Resources
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SPASX and Firetail is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SPASX Dividend Opportunities and Firetail Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firetail Resources and SPASX Dividend 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 SPASX Dividend Opportunities are associated (or correlated) with Firetail Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firetail Resources has no effect on the direction of SPASX Dividend i.e., SPASX Dividend and Firetail Resources go up and down completely randomly.
Pair Corralation between SPASX Dividend and Firetail Resources
Assuming the 90 days trading horizon SPASX Dividend is expected to generate 10.93 times less return on investment than Firetail Resources. But when comparing it to its historical volatility, SPASX Dividend Opportunities is 14.34 times less risky than Firetail Resources. It trades about 0.03 of its potential returns per unit of risk. Firetail Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Firetail Resources on September 3, 2024 and sell it today you would lose (7.00) from holding Firetail Resources or give up 46.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPASX Dividend Opportunities vs. Firetail Resources
Performance |
| Timeline |
SPASX Dividend and Firetail Resources Volatility Contrast
Predicted Return Density |
| Returns |
SPASX Dividend Opportunities
Pair trading matchups for SPASX Dividend
Firetail Resources
Pair trading matchups for Firetail Resources
Pair Trading with SPASX Dividend and Firetail Resources
The main advantage of trading using opposite SPASX Dividend and Firetail Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPASX Dividend position performs unexpectedly, Firetail 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 Firetail Resources will offset losses from the drop in Firetail Resources' long position.| SPASX Dividend vs. Spirit Telecom | SPASX Dividend vs. Australian Unity Office | SPASX Dividend vs. Saferoads Holdings | SPASX Dividend vs. Leeuwin Metals |
| Firetail Resources vs. MFF Capital Investments | Firetail Resources vs. Bio Gene Technology | Firetail Resources vs. Hutchison Telecommunications | Firetail Resources vs. Australian United Investment |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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