Correlation Between Clime Investment and Iluka Resources
Can any of the company-specific risk be diversified away by investing in both Clime Investment and Iluka Resources 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 Clime Investment and Iluka Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clime Investment Management and Iluka Resources, you can compare the effects of market volatilities on Clime Investment and Iluka Resources 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 Clime Investment with a short position of Iluka Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Iluka Resources.
Diversification Opportunities for Clime Investment and Iluka Resources
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clime and Iluka is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Iluka Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iluka Resources and Clime Investment 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 Clime Investment Management are associated (or correlated) with Iluka Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iluka Resources has no effect on the direction of Clime Investment i.e., Clime Investment and Iluka Resources go up and down completely randomly.
Pair Corralation between Clime Investment and Iluka Resources
Assuming the 90 days trading horizon Clime Investment Management is expected to generate 1.06 times more return on investment than Iluka Resources. However, Clime Investment is 1.06 times more volatile than Iluka Resources. It trades about 0.0 of its potential returns per unit of risk. Iluka Resources is currently generating about -0.08 per unit of risk. If you would invest 40.00 in Clime Investment Management on September 2, 2024 and sell it today you would lose (5.00) from holding Clime Investment Management or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clime Investment Management vs. Iluka Resources
Performance |
| Timeline |
| Clime Investment Man |
| Iluka Resources |
Clime Investment and Iluka Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clime Investment and Iluka Resources
The main advantage of trading using opposite Clime Investment and Iluka Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clime Investment position performs unexpectedly, Iluka Resources 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 Iluka Resources will offset losses from the drop in Iluka Resources' long position.| Clime Investment vs. WA1 Resources | Clime Investment vs. Predictive Discovery | Clime Investment vs. Cooper Metals | Clime Investment vs. OD6 Metals |
| Iluka Resources vs. National Storage REIT | Iluka Resources vs. RLF AgTech | Iluka Resources vs. Computershare | Iluka Resources vs. Srj Technologies Group |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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