Correlation Between Collins Foods and Iron Road
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Iron Road 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 Iron Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Iron Road, you can compare the effects of market volatilities on Collins Foods and Iron Road 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 Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Iron Road.
Diversification Opportunities for Collins Foods and Iron Road
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Collins and Iron is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road 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 Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road has no effect on the direction of Collins Foods i.e., Collins Foods and Iron Road go up and down completely randomly.
Pair Corralation between Collins Foods and Iron Road
Assuming the 90 days trading horizon Collins Foods is expected to generate 0.41 times more return on investment than Iron Road. However, Collins Foods is 2.42 times less risky than Iron Road. It trades about -0.02 of its potential returns per unit of risk. Iron Road is currently generating about -0.05 per unit of risk. If you would invest 768.00 in Collins Foods on November 2, 2024 and sell it today you would lose (24.00) from holding Collins Foods or give up 3.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Iron Road
Performance |
| Timeline |
| Collins Foods |
| Iron Road |
Collins Foods and Iron Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Iron Road
The main advantage of trading using opposite Collins Foods and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Iron Road 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 Iron Road will offset losses from the drop in Iron Road's long position.| Collins Foods vs. Oceania Healthcare | Collins Foods vs. Epsilon Healthcare | Collins Foods vs. Bailador Technology Invest | Collins Foods vs. Regal Funds Management |
| Iron Road vs. Lykos Metals | Iron Road vs. Collins Foods | Iron Road vs. Aristocrat Leisure | Iron Road vs. Everest Metals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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