Correlation Between Champion Iron and Ero Copper
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Ero Copper 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 Ero Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Ero Copper Corp, you can compare the effects of market volatilities on Champion Iron and Ero Copper 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 Ero Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Ero Copper.
Diversification Opportunities for Champion Iron and Ero Copper
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Champion and Ero is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Ero Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ero Copper Corp 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 Ero Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ero Copper Corp has no effect on the direction of Champion Iron i.e., Champion Iron and Ero Copper go up and down completely randomly.
Pair Corralation between Champion Iron and Ero Copper
Assuming the 90 days trading horizon Champion Iron is expected to generate 0.93 times more return on investment than Ero Copper. However, Champion Iron is 1.07 times less risky than Ero Copper. It trades about -0.13 of its potential returns per unit of risk. Ero Copper Corp is currently generating about -0.34 per unit of risk. If you would invest 550.00 in Champion Iron on August 29, 2024 and sell it today you would lose (45.00) from holding Champion Iron or give up 8.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champion Iron vs. Ero Copper Corp
Performance |
| Timeline |
| Champion Iron |
| Ero Copper Corp |
Champion Iron and Ero Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champion Iron and Ero Copper
The main advantage of trading using opposite Champion Iron and Ero Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Ero Copper 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 Ero Copper will offset losses from the drop in Ero Copper's long position.| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
| Ero Copper vs. SSR Mining | Ero Copper vs. MAG Silver Corp | Ero Copper vs. Torex Gold Resources | Ero Copper vs. Pan American Silver |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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