Correlation Between Collins Foods and Eagle Mountain
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Eagle Mountain 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 Collins Foods and Eagle Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Eagle Mountain Mining, you can compare the effects of market volatilities on Collins Foods and Eagle Mountain 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 Collins Foods with a short position of Eagle Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Eagle Mountain.
Diversification Opportunities for Collins Foods and Eagle Mountain
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Collins and Eagle is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Eagle Mountain Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Mountain Mining and Collins Foods 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 Collins Foods are associated (or correlated) with Eagle Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Mountain Mining has no effect on the direction of Collins Foods i.e., Collins Foods and Eagle Mountain go up and down completely randomly.
Pair Corralation between Collins Foods and Eagle Mountain
Assuming the 90 days trading horizon Collins Foods is expected to generate 0.15 times more return on investment than Eagle Mountain. However, Collins Foods is 6.72 times less risky than Eagle Mountain. It trades about 0.02 of its potential returns per unit of risk. Eagle Mountain Mining is currently generating about -0.18 per unit of risk. If you would invest 842.00 in Collins Foods on August 24, 2024 and sell it today you would earn a total of 2.00 from holding Collins Foods or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Eagle Mountain Mining
Performance |
| Timeline |
| Collins Foods |
| Eagle Mountain Mining |
Collins Foods and Eagle Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Eagle Mountain
The main advantage of trading using opposite Collins Foods and Eagle Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Eagle Mountain 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 Eagle Mountain will offset losses from the drop in Eagle Mountain's long position.| Collins Foods vs. Charter Hall Retail | Collins Foods vs. National Australia Bank | Collins Foods vs. Finexia Financial Group | Collins Foods vs. Pioneer Credit |
| Eagle Mountain vs. Northern Star Resources | Eagle Mountain vs. Evolution Mining | Eagle Mountain vs. Aneka Tambang Tbk | Eagle Mountain vs. De Grey Mining |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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