Correlation Between Eagle Mountain and CSL
Can any of the company-specific risk be diversified away by investing in both Eagle Mountain and CSL 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 Eagle Mountain and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Mountain Mining and CSL, you can compare the effects of market volatilities on Eagle Mountain and CSL 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 Eagle Mountain with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Mountain and CSL.
Diversification Opportunities for Eagle Mountain and CSL
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eagle and CSL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mountain Mining and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Eagle Mountain 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 Eagle Mountain Mining are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Eagle Mountain i.e., Eagle Mountain and CSL go up and down completely randomly.
Pair Corralation between Eagle Mountain and CSL
Assuming the 90 days trading horizon Eagle Mountain Mining is expected to under-perform the CSL. In addition to that, Eagle Mountain is 5.15 times more volatile than CSL. It trades about -0.05 of its total potential returns per unit of risk. CSL is currently generating about 0.0 per unit of volatility. If you would invest 28,972 in CSL on August 29, 2024 and sell it today you would lose (950.00) from holding CSL or give up 3.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Mountain Mining vs. CSL
Performance |
| Timeline |
| Eagle Mountain Mining |
| CSL |
Eagle Mountain and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Mountain and CSL
The main advantage of trading using opposite Eagle Mountain and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Mountain position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Eagle Mountain vs. Northern Star Resources | Eagle Mountain vs. Evolution Mining | Eagle Mountain vs. Bluescope Steel | Eagle Mountain vs. Sandfire Resources NL |
| CSL vs. Bio Gene Technology | CSL vs. Viva Leisure | CSL vs. Sandon Capital Investments | CSL vs. Diversified United Investment |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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