Correlation Between Bluescope Steel and Itech Minerals
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Itech 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 Bluescope Steel and Itech Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Itech Minerals, you can compare the effects of market volatilities on Bluescope Steel and Itech 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 Bluescope Steel with a short position of Itech Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Itech Minerals.
Diversification Opportunities for Bluescope Steel and Itech Minerals
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bluescope and Itech is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Itech Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itech Minerals and Bluescope Steel 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 Bluescope Steel are associated (or correlated) with Itech Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itech Minerals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Itech Minerals go up and down completely randomly.
Pair Corralation between Bluescope Steel and Itech Minerals
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.47 times more return on investment than Itech Minerals. However, Bluescope Steel is 2.12 times less risky than Itech Minerals. It trades about -0.02 of its potential returns per unit of risk. Itech Minerals is currently generating about -0.27 per unit of risk. If you would invest 2,121 in Bluescope Steel on September 14, 2024 and sell it today you would lose (29.00) from holding Bluescope Steel or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Itech Minerals
Performance |
| Timeline |
| Bluescope Steel |
| Itech Minerals |
Bluescope Steel and Itech Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Itech Minerals
The main advantage of trading using opposite Bluescope Steel and Itech Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Itech 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 Itech Minerals will offset losses from the drop in Itech Minerals' long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. Sandfire Resources NL | Bluescope Steel vs. De Grey Mining |
| Itech Minerals vs. Northern Star Resources | Itech Minerals vs. Evolution Mining | Itech Minerals vs. Bluescope Steel | Itech Minerals 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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