Correlation Between Beowulf Mining and Johnson Matthey
Can any of the company-specific risk be diversified away by investing in both Beowulf Mining and Johnson Matthey 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 Beowulf Mining and Johnson Matthey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beowulf Mining and Johnson Matthey PLC, you can compare the effects of market volatilities on Beowulf Mining and Johnson Matthey 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 Beowulf Mining with a short position of Johnson Matthey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beowulf Mining and Johnson Matthey.
Diversification Opportunities for Beowulf Mining and Johnson Matthey
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beowulf and Johnson is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Beowulf Mining and Johnson Matthey PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Matthey PLC and Beowulf 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 Beowulf Mining are associated (or correlated) with Johnson Matthey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Matthey PLC has no effect on the direction of Beowulf Mining i.e., Beowulf Mining and Johnson Matthey go up and down completely randomly.
Pair Corralation between Beowulf Mining and Johnson Matthey
Assuming the 90 days trading horizon Beowulf Mining is expected to generate 4.95 times more return on investment than Johnson Matthey. However, Beowulf Mining is 4.95 times more volatile than Johnson Matthey PLC. It trades about 0.06 of its potential returns per unit of risk. Johnson Matthey PLC is currently generating about -0.29 per unit of risk. If you would invest 1,550 in Beowulf Mining on October 15, 2024 and sell it today you would earn a total of 50.00 from holding Beowulf Mining or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beowulf Mining vs. Johnson Matthey PLC
Performance |
| Timeline |
| Beowulf Mining |
| Johnson Matthey PLC |
Beowulf Mining and Johnson Matthey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beowulf Mining and Johnson Matthey
The main advantage of trading using opposite Beowulf Mining and Johnson Matthey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beowulf Mining position performs unexpectedly, Johnson Matthey 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 Johnson Matthey will offset losses from the drop in Johnson Matthey's long position.| Beowulf Mining vs. Electronic Arts | Beowulf Mining vs. Metals Exploration Plc | Beowulf Mining vs. Odfjell Drilling | Beowulf Mining vs. GreenX Metals |
| Johnson Matthey vs. Take Two Interactive Software | Johnson Matthey vs. Samsung Electronics Co | Johnson Matthey vs. LPKF Laser Electronics | Johnson Matthey vs. Pets at Home |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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