Correlation Between Black Rock and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Black Rock and Australian Agricultural 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 Rock and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Australian Agricultural, you can compare the effects of market volatilities on Black Rock and Australian Agricultural 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 Rock with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Australian Agricultural.
Diversification Opportunities for Black Rock and Australian Agricultural
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Black and Australian is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and Black Rock 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 Rock Mining are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Black Rock i.e., Black Rock and Australian Agricultural go up and down completely randomly.
Pair Corralation between Black Rock and Australian Agricultural
Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Australian Agricultural. In addition to that, Black Rock is 3.05 times more volatile than Australian Agricultural. It trades about -0.15 of its total potential returns per unit of risk. Australian Agricultural is currently generating about 0.0 per unit of volatility. If you would invest 140.00 in Australian Agricultural on September 5, 2024 and sell it today you would lose (1.00) from holding Australian Agricultural or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Rock Mining vs. Australian Agricultural
Performance |
| Timeline |
| Black Rock Mining |
| Australian Agricultural |
Black Rock and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Rock and Australian Agricultural
The main advantage of trading using opposite Black Rock and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Sandfire Resources NL |
| Australian Agricultural vs. Audio Pixels Holdings | Australian Agricultural vs. Norwest Minerals | Australian Agricultural vs. Lindian Resources | Australian Agricultural vs. Resource Base |
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 CEOs Directory module to screen CEOs from public companies around the world.
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