Correlation Between Champion Iron and Blue Thunder
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Blue Thunder 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 Blue Thunder into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Blue Thunder Mining, you can compare the effects of market volatilities on Champion Iron and Blue Thunder 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 Blue Thunder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Blue Thunder.
Diversification Opportunities for Champion Iron and Blue Thunder
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Champion and Blue is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Blue Thunder Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Thunder Mining 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 Blue Thunder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Thunder Mining has no effect on the direction of Champion Iron i.e., Champion Iron and Blue Thunder go up and down completely randomly.
Pair Corralation between Champion Iron and Blue Thunder
Assuming the 90 days trading horizon Champion Iron is expected to under-perform the Blue Thunder. But the stock apears to be less risky and, when comparing its historical volatility, Champion Iron is 3.01 times less risky than Blue Thunder. The stock trades about -0.03 of its potential returns per unit of risk. The Blue Thunder Mining is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 8.50 in Blue Thunder Mining on September 4, 2024 and sell it today you would lose (4.00) from holding Blue Thunder Mining or give up 47.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Champion Iron vs. Blue Thunder Mining
Performance |
| Timeline |
| Champion Iron |
| Blue Thunder Mining |
Champion Iron and Blue Thunder Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Blue Thunder
The main advantage of trading using opposite Champion Iron and Blue Thunder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Blue Thunder 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 Blue Thunder will offset losses from the drop in Blue Thunder's long position.| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
| Blue Thunder vs. A W FOOD | Blue Thunder vs. Summa Silver Corp | Blue Thunder vs. Rubicon Organics | Blue Thunder vs. Metalero Mining Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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