Correlation Between Collins Foods and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Sandfire 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 Collins Foods and Sandfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Sandfire Resources NL, you can compare the effects of market volatilities on Collins Foods and Sandfire 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 Collins Foods with a short position of Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Sandfire Resources.
Diversification Opportunities for Collins Foods and Sandfire Resources
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Collins and Sandfire is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Collins Foods i.e., Collins Foods and Sandfire Resources go up and down completely randomly.
Pair Corralation between Collins Foods and Sandfire Resources
Assuming the 90 days trading horizon Collins Foods is expected to generate 0.72 times more return on investment than Sandfire Resources. However, Collins Foods is 1.39 times less risky than Sandfire Resources. It trades about 0.17 of its potential returns per unit of risk. Sandfire Resources NL is currently generating about 0.01 per unit of risk. If you would invest 835.00 in Collins Foods on September 1, 2024 and sell it today you would earn a total of 24.00 from holding Collins Foods or generate 2.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Collins Foods vs. Sandfire Resources NL
Performance |
| Timeline |
| Collins Foods |
| Sandfire Resources |
Collins Foods and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Sandfire Resources
The main advantage of trading using opposite Collins Foods and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Sandfire 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| Collins Foods vs. iShares Global Healthcare | Collins Foods vs. Australian Dairy Farms | Collins Foods vs. Adriatic Metals Plc | Collins Foods vs. Australian Agricultural |
| Sandfire Resources vs. Readytech Holdings | Sandfire Resources vs. Thorney Technologies | Sandfire Resources vs. TTG Fintech | Sandfire Resources vs. BTC Health Limited |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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