Correlation Between Champion Iron and Australia
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Australia 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 Champion Iron and Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Australia and New, you can compare the effects of market volatilities on Champion Iron and Australia 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 Champion Iron with a short position of Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Australia.
Diversification Opportunities for Champion Iron and Australia
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Champion and Australia is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Australia and New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australia and New and Champion 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 Champion Iron are associated (or correlated) with Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australia and New has no effect on the direction of Champion Iron i.e., Champion Iron and Australia go up and down completely randomly.
Pair Corralation between Champion Iron and Australia
Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Australia. In addition to that, Champion Iron is 2.27 times more volatile than Australia and New. It trades about -0.11 of its total potential returns per unit of risk. Australia and New is currently generating about 0.32 per unit of volatility. If you would invest 2,859 in Australia and New on November 3, 2024 and sell it today you would earn a total of 203.00 from holding Australia and New or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Australia and New
Performance |
| Timeline |
| Champion Iron |
| Australia and New |
Champion Iron and Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Australia
The main advantage of trading using opposite Champion Iron and Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Australia 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 Australia will offset losses from the drop in Australia's long position.| Champion Iron vs. Auswide Bank | Champion Iron vs. Step One Clothing | Champion Iron vs. Qbe Insurance Group | Champion Iron vs. Liberty Financial Group |
| Australia vs. Duxton Broadacre Farms | Australia vs. Iron Road | Australia vs. Oceania Healthcare | Australia vs. Beston Global Food |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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