Correlation Between Clime Investment and Leeuwin Metals
Can any of the company-specific risk be diversified away by investing in both Clime Investment and Leeuwin Metals 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 Leeuwin Metals 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 Leeuwin Metals, you can compare the effects of market volatilities on Clime Investment and Leeuwin Metals 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 Leeuwin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clime Investment and Leeuwin Metals.
Diversification Opportunities for Clime Investment and Leeuwin Metals
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clime and Leeuwin is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Leeuwin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leeuwin Metals 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 Leeuwin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leeuwin Metals has no effect on the direction of Clime Investment i.e., Clime Investment and Leeuwin Metals go up and down completely randomly.
Pair Corralation between Clime Investment and Leeuwin Metals
Assuming the 90 days trading horizon Clime Investment Management is expected to generate 0.39 times more return on investment than Leeuwin Metals. However, Clime Investment Management is 2.57 times less risky than Leeuwin Metals. It trades about -0.02 of its potential returns per unit of risk. Leeuwin Metals is currently generating about -0.02 per unit of risk. If you would invest 50.00 in Clime Investment Management on August 29, 2024 and sell it today you would lose (15.00) from holding Clime Investment Management or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.74% |
| Values | Daily Returns |
Clime Investment Management vs. Leeuwin Metals
Performance |
| Timeline |
| Clime Investment Man |
| Leeuwin Metals |
Clime Investment and Leeuwin Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clime Investment and Leeuwin Metals
The main advantage of trading using opposite Clime Investment and Leeuwin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clime Investment position performs unexpectedly, Leeuwin Metals 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 Leeuwin Metals will offset losses from the drop in Leeuwin Metals' long position.| Clime Investment vs. National Australia Bank | Clime Investment vs. National Australia Bank | Clime Investment vs. Westpac Banking | Clime Investment vs. National Australia Bank |
| Leeuwin Metals vs. Northern Star Resources | Leeuwin Metals vs. Evolution Mining | Leeuwin Metals vs. Bluescope Steel | Leeuwin Metals vs. Sandfire Resources NL |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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