Correlation Between Bluescope Steel and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both Bluescope Steel and Patriot Battery 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 Patriot Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluescope Steel and Patriot Battery Metals, you can compare the effects of market volatilities on Bluescope Steel and Patriot Battery 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 Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluescope Steel and Patriot Battery.
Diversification Opportunities for Bluescope Steel and Patriot Battery
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bluescope and Patriot is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bluescope Steel and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery Metals 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of Bluescope Steel i.e., Bluescope Steel and Patriot Battery go up and down completely randomly.
Pair Corralation between Bluescope Steel and Patriot Battery
Assuming the 90 days trading horizon Bluescope Steel is expected to generate 0.48 times more return on investment than Patriot Battery. However, Bluescope Steel is 2.08 times less risky than Patriot Battery. It trades about 0.01 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about -0.24 per unit of risk. If you would invest 2,220 in Bluescope Steel on August 31, 2024 and sell it today you would lose (8.00) from holding Bluescope Steel or give up 0.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluescope Steel vs. Patriot Battery Metals
Performance |
| Timeline |
| Bluescope Steel |
| Patriot Battery Metals |
Bluescope Steel and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluescope Steel and Patriot Battery
The main advantage of trading using opposite Bluescope Steel and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluescope Steel position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| Bluescope Steel vs. Northern Star Resources | Bluescope Steel vs. Evolution Mining | Bluescope Steel vs. De Grey Mining |
| Patriot Battery vs. Northern Star Resources | Patriot Battery vs. Evolution Mining | Patriot Battery vs. Bluescope Steel | Patriot Battery vs. De Grey Mining |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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