Correlation Between DAIRY FARM and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and Fortescue 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 DAIRY FARM and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIRY FARM INTL and Fortescue Metals Group, you can compare the effects of market volatilities on DAIRY FARM and Fortescue 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 DAIRY FARM with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and Fortescue Metals.
Diversification Opportunities for DAIRY FARM and Fortescue Metals
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DAIRY and Fortescue is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and DAIRY FARM 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 DAIRY FARM INTL are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and Fortescue Metals go up and down completely randomly.
Pair Corralation between DAIRY FARM and Fortescue Metals
Assuming the 90 days trading horizon DAIRY FARM INTL is expected to generate 1.01 times more return on investment than Fortescue Metals. However, DAIRY FARM is 1.01 times more volatile than Fortescue Metals Group. It trades about 0.05 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about -0.04 per unit of risk. If you would invest 179.00 in DAIRY FARM INTL on November 8, 2024 and sell it today you would earn a total of 41.00 from holding DAIRY FARM INTL or generate 22.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. Fortescue Metals Group
Performance |
| Timeline |
| DAIRY FARM INTL |
| Fortescue Metals |
DAIRY FARM and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and Fortescue Metals
The main advantage of trading using opposite DAIRY FARM and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM position performs unexpectedly, Fortescue 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| DAIRY FARM vs. Dentsply Sirona | DAIRY FARM vs. Nippon Steel | DAIRY FARM vs. Haverty Furniture Companies | DAIRY FARM vs. CALTAGIRONE EDITORE |
| Fortescue Metals vs. MINCO SILVER | Fortescue Metals vs. Zijin Mining Group | Fortescue Metals vs. GRIFFIN MINING LTD | Fortescue Metals vs. Eurasia Mining Plc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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