Correlation Between Black Iron and Aura Minerals
Can any of the company-specific risk be diversified away by investing in both Black Iron and Aura Minerals 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 Black Iron and Aura Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Iron and Aura Minerals, you can compare the effects of market volatilities on Black Iron and Aura Minerals 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 Black Iron with a short position of Aura Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Iron and Aura Minerals.
Diversification Opportunities for Black Iron and Aura Minerals
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Black and Aura is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Black Iron and Aura Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Minerals and Black Iron 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 Black Iron are associated (or correlated) with Aura Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Minerals has no effect on the direction of Black Iron i.e., Black Iron and Aura Minerals go up and down completely randomly.
Pair Corralation between Black Iron and Aura Minerals
Assuming the 90 days trading horizon Black Iron is expected to generate 10.75 times more return on investment than Aura Minerals. However, Black Iron is 10.75 times more volatile than Aura Minerals. It trades about 0.18 of its potential returns per unit of risk. Aura Minerals is currently generating about 0.14 per unit of risk. If you would invest 5.00 in Black Iron on August 26, 2024 and sell it today you would earn a total of 3.50 from holding Black Iron or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Iron vs. Aura Minerals
Performance |
| Timeline |
| Black Iron |
| Aura Minerals |
Black Iron and Aura Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Iron and Aura Minerals
The main advantage of trading using opposite Black Iron and Aura Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Iron position performs unexpectedly, Aura Minerals 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 Aura Minerals will offset losses from the drop in Aura Minerals' long position.| Black Iron vs. Northcliff Resources | Black Iron vs. St Augustine Gold | Black Iron vs. Mammoth Resources Corp | Black Iron vs. Black Widow Resources |
| Aura Minerals vs. First Majestic Silver | Aura Minerals vs. Ivanhoe Energy | Aura Minerals vs. Orezone Gold Corp | Aura Minerals vs. Faraday Copper 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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