Correlation Between Collins Foods and Strickland Metals
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Strickland 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 Collins Foods and Strickland Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Strickland Metals, you can compare the effects of market volatilities on Collins Foods and Strickland 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 Collins Foods with a short position of Strickland Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Strickland Metals.
Diversification Opportunities for Collins Foods and Strickland Metals
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Collins and Strickland is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Strickland Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strickland Metals 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 Strickland Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strickland Metals has no effect on the direction of Collins Foods i.e., Collins Foods and Strickland Metals go up and down completely randomly.
Pair Corralation between Collins Foods and Strickland Metals
Assuming the 90 days trading horizon Collins Foods is expected to generate 0.43 times more return on investment than Strickland Metals. However, Collins Foods is 2.32 times less risky than Strickland Metals. It trades about -0.06 of its potential returns per unit of risk. Strickland Metals is currently generating about -0.04 per unit of risk. If you would invest 730.00 in Collins Foods on October 20, 2024 and sell it today you would lose (12.00) from holding Collins Foods or give up 1.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Strickland Metals
Performance |
| Timeline |
| Collins Foods |
| Strickland Metals |
Collins Foods and Strickland Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Strickland Metals
The main advantage of trading using opposite Collins Foods and Strickland Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Strickland 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 Strickland Metals will offset losses from the drop in Strickland Metals' long position.| Collins Foods vs. Centaurus Metals | Collins Foods vs. Truscott Mining Corp | Collins Foods vs. ACDC Metals | Collins Foods vs. Centrex Metals |
| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland Metals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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