Correlation Between Champion Iron and Elcora Advanced
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Elcora Advanced 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 Elcora Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Elcora Advanced Materials, you can compare the effects of market volatilities on Champion Iron and Elcora Advanced 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 Elcora Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Elcora Advanced.
Diversification Opportunities for Champion Iron and Elcora Advanced
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Champion and Elcora is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Elcora Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcora Advanced Materials 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 Elcora Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcora Advanced Materials has no effect on the direction of Champion Iron i.e., Champion Iron and Elcora Advanced go up and down completely randomly.
Pair Corralation between Champion Iron and Elcora Advanced
Assuming the 90 days trading horizon Champion Iron is expected to generate 0.6 times more return on investment than Elcora Advanced. However, Champion Iron is 1.66 times less risky than Elcora Advanced. It trades about -0.05 of its potential returns per unit of risk. Elcora Advanced Materials is currently generating about -0.22 per unit of risk. If you would invest 554.00 in Champion Iron on September 4, 2024 and sell it today you would lose (20.00) from holding Champion Iron or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Champion Iron vs. Elcora Advanced Materials
Performance |
| Timeline |
| Champion Iron |
| Elcora Advanced Materials |
Champion Iron and Elcora Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Elcora Advanced
The main advantage of trading using opposite Champion Iron and Elcora Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Elcora Advanced 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 Elcora Advanced will offset losses from the drop in Elcora Advanced's long position.| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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