Correlation Between Collins Foods and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Collins Foods and Whitehaven Coal 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 Whitehaven Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Collins Foods and Whitehaven Coal, you can compare the effects of market volatilities on Collins Foods and Whitehaven Coal 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 Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Collins Foods and Whitehaven Coal.
Diversification Opportunities for Collins Foods and Whitehaven Coal
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Collins and Whitehaven is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Whitehaven Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal 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 Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of Collins Foods i.e., Collins Foods and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Collins Foods and Whitehaven Coal
Assuming the 90 days trading horizon Collins Foods is expected to generate 0.62 times more return on investment than Whitehaven Coal. However, Collins Foods is 1.62 times less risky than Whitehaven Coal. It trades about 0.11 of its potential returns per unit of risk. Whitehaven Coal is currently generating about -0.05 per unit of risk. If you would invest 733.00 in Collins Foods on November 3, 2024 and sell it today you would earn a total of 21.00 from holding Collins Foods or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Collins Foods vs. Whitehaven Coal
Performance |
| Timeline |
| Collins Foods |
| Whitehaven Coal |
Collins Foods and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Collins Foods and Whitehaven Coal
The main advantage of trading using opposite Collins Foods and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collins Foods position performs unexpectedly, Whitehaven Coal 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| Collins Foods vs. Aneka Tambang Tbk | Collins Foods vs. Macquarie Group | Collins Foods vs. Macquarie Group Ltd | Collins Foods vs. Challenger |
| Whitehaven Coal vs. Regis Healthcare | Whitehaven Coal vs. Dicker Data | Whitehaven Coal vs. Iron Road | Whitehaven Coal vs. Bluescope Steel |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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