Correlation Between Eagle Mountain and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Eagle Mountain and Mount Gibson 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 Mount Gibson 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 Mount Gibson Iron, you can compare the effects of market volatilities on Eagle Mountain and Mount Gibson 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 Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Mountain and Mount Gibson.
Diversification Opportunities for Eagle Mountain and Mount Gibson
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eagle and Mount is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Mountain Mining and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron 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 Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of Eagle Mountain i.e., Eagle Mountain and Mount Gibson go up and down completely randomly.
Pair Corralation between Eagle Mountain and Mount Gibson
Assuming the 90 days trading horizon Eagle Mountain Mining is expected to under-perform the Mount Gibson. In addition to that, Eagle Mountain is 6.12 times more volatile than Mount Gibson Iron. It trades about -0.26 of its total potential returns per unit of risk. Mount Gibson Iron is currently generating about -0.07 per unit of volatility. If you would invest 31.00 in Mount Gibson Iron on August 30, 2024 and sell it today you would lose (1.00) from holding Mount Gibson Iron or give up 3.23% 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. Mount Gibson Iron
Performance |
| Timeline |
| Eagle Mountain Mining |
| Mount Gibson Iron |
Eagle Mountain and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Mountain and Mount Gibson
The main advantage of trading using opposite Eagle Mountain and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Mountain position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson'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 |
| Mount Gibson vs. Northern Star Resources | Mount Gibson vs. Evolution Mining | Mount Gibson vs. Bluescope Steel | Mount Gibson vs. Sandfire Resources NL |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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