Correlation Between Champion Iron and Marmota Energy
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Marmota Energy 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 Marmota Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Marmota Energy, you can compare the effects of market volatilities on Champion Iron and Marmota Energy 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 Marmota Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Marmota Energy.
Diversification Opportunities for Champion Iron and Marmota Energy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Champion and Marmota is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Marmota Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marmota Energy 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 Marmota Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marmota Energy has no effect on the direction of Champion Iron i.e., Champion Iron and Marmota Energy go up and down completely randomly.
Pair Corralation between Champion Iron and Marmota Energy
Assuming the 90 days trading horizon Champion Iron is expected to generate 1.31 times less return on investment than Marmota Energy. But when comparing it to its historical volatility, Champion Iron is 1.68 times less risky than Marmota Energy. It trades about 0.03 of its potential returns per unit of risk. Marmota Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3.80 in Marmota Energy on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Marmota Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Marmota Energy
Performance |
| Timeline |
| Champion Iron |
| Marmota Energy |
Champion Iron and Marmota Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Marmota Energy
The main advantage of trading using opposite Champion Iron and Marmota Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Marmota Energy 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 Marmota Energy will offset losses from the drop in Marmota Energy's long position.| Champion Iron vs. Apiam Animal Health | Champion Iron vs. Group 6 Metals | Champion Iron vs. Black Rock Mining | Champion Iron vs. Sonic Healthcare |
| Marmota Energy vs. Neurotech International | Marmota Energy vs. Hutchison Telecommunications | Marmota Energy vs. Mach7 Technologies | Marmota Energy vs. Genetic Technologies |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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