Correlation Between Carawine Resources and Kip McGrath
Can any of the company-specific risk be diversified away by investing in both Carawine Resources and Kip McGrath 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 Carawine Resources and Kip McGrath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carawine Resources Limited and Kip McGrath Education, you can compare the effects of market volatilities on Carawine Resources and Kip McGrath 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 Carawine Resources with a short position of Kip McGrath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carawine Resources and Kip McGrath.
Diversification Opportunities for Carawine Resources and Kip McGrath
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carawine and Kip is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Carawine Resources Limited and Kip McGrath Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kip McGrath Education and Carawine Resources 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 Carawine Resources Limited are associated (or correlated) with Kip McGrath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kip McGrath Education has no effect on the direction of Carawine Resources i.e., Carawine Resources and Kip McGrath go up and down completely randomly.
Pair Corralation between Carawine Resources and Kip McGrath
Assuming the 90 days trading horizon Carawine Resources Limited is expected to generate 2.3 times more return on investment than Kip McGrath. However, Carawine Resources is 2.3 times more volatile than Kip McGrath Education. It trades about 0.14 of its potential returns per unit of risk. Kip McGrath Education is currently generating about -0.06 per unit of risk. If you would invest 10.00 in Carawine Resources Limited on November 7, 2024 and sell it today you would earn a total of 1.00 from holding Carawine Resources Limited or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carawine Resources Limited vs. Kip McGrath Education
Performance |
| Timeline |
| Carawine Resources |
| Kip McGrath Education |
Carawine Resources and Kip McGrath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carawine Resources and Kip McGrath
The main advantage of trading using opposite Carawine Resources and Kip McGrath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carawine Resources position performs unexpectedly, Kip McGrath 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 Kip McGrath will offset losses from the drop in Kip McGrath's long position.| Carawine Resources vs. Northern Star Resources | Carawine Resources vs. Evolution Mining | Carawine Resources vs. Bluescope Steel | Carawine Resources vs. De Grey Mining |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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