Correlation Between DY6 Metals and Indiana Resources
Can any of the company-specific risk be diversified away by investing in both DY6 Metals and Indiana 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 DY6 Metals and Indiana Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DY6 Metals and Indiana Resources, you can compare the effects of market volatilities on DY6 Metals and Indiana 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 DY6 Metals with a short position of Indiana Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and Indiana Resources.
Diversification Opportunities for DY6 Metals and Indiana Resources
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between DY6 and Indiana is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals and Indiana Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indiana Resources and DY6 Metals 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 DY6 Metals are associated (or correlated) with Indiana Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indiana Resources has no effect on the direction of DY6 Metals i.e., DY6 Metals and Indiana Resources go up and down completely randomly.
Pair Corralation between DY6 Metals and Indiana Resources
Assuming the 90 days trading horizon DY6 Metals is expected to under-perform the Indiana Resources. In addition to that, DY6 Metals is 2.72 times more volatile than Indiana Resources. It trades about -0.17 of its total potential returns per unit of risk. Indiana Resources is currently generating about 0.26 per unit of volatility. If you would invest 6.10 in Indiana Resources on October 24, 2024 and sell it today you would earn a total of 0.40 from holding Indiana Resources or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
DY6 Metals vs. Indiana Resources
Performance |
| Timeline |
| DY6 Metals |
| Indiana Resources |
DY6 Metals and Indiana Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DY6 Metals and Indiana Resources
The main advantage of trading using opposite DY6 Metals and Indiana Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 Metals position performs unexpectedly, Indiana 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 Indiana Resources will offset losses from the drop in Indiana Resources' long position.| DY6 Metals vs. Northern Star Resources | DY6 Metals vs. Evolution Mining | DY6 Metals vs. Bluescope Steel | DY6 Metals vs. De Grey Mining |
| Indiana Resources vs. DY6 Metals | Indiana Resources vs. Data3 | Indiana Resources vs. M3 Mining | Indiana Resources vs. Aeon Metals |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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