Correlation Between SPASX Dividend and Metro Mining
Can any of the company-specific risk be diversified away by investing in both SPASX Dividend and Metro Mining 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 Metro Mining 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 Metro Mining, you can compare the effects of market volatilities on SPASX Dividend and Metro Mining 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 Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPASX Dividend and Metro Mining.
Diversification Opportunities for SPASX Dividend and Metro Mining
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPASX and Metro is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SPASX Dividend Opportunities and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining 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 Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of SPASX Dividend i.e., SPASX Dividend and Metro Mining go up and down completely randomly.
Pair Corralation between SPASX Dividend and Metro Mining
Assuming the 90 days trading horizon SPASX Dividend is expected to generate 6.54 times less return on investment than Metro Mining. But when comparing it to its historical volatility, SPASX Dividend Opportunities is 4.4 times less risky than Metro Mining. It trades about 0.05 of its potential returns per unit of risk. Metro Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5.30 in Metro Mining on August 28, 2024 and sell it today you would earn a total of 0.20 from holding Metro Mining or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPASX Dividend Opportunities vs. Metro Mining
Performance |
| Timeline |
SPASX Dividend and Metro Mining Volatility Contrast
Predicted Return Density |
| Returns |
SPASX Dividend Opportunities
Pair trading matchups for SPASX Dividend
Metro Mining
Pair trading matchups for Metro Mining
Pair Trading with SPASX Dividend and Metro Mining
The main advantage of trading using opposite SPASX Dividend and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPASX Dividend position performs unexpectedly, Metro Mining 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 Metro Mining will offset losses from the drop in Metro Mining's long position.| SPASX Dividend vs. Red Hill Iron | SPASX Dividend vs. Ainsworth Game Technology | SPASX Dividend vs. Champion Iron | SPASX Dividend vs. Autosports Group |
| Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Sandfire Resources NL |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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