Correlation Between Emetals and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Emetals 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 Emetals and Mount Gibson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emetals and Mount Gibson Iron, you can compare the effects of market volatilities on Emetals 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 Emetals with a short position of Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emetals and Mount Gibson.
Diversification Opportunities for Emetals and Mount Gibson
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Emetals and Mount is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Emetals 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 Emetals 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 Emetals 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 Emetals i.e., Emetals and Mount Gibson go up and down completely randomly.
Pair Corralation between Emetals and Mount Gibson
Assuming the 90 days trading horizon Emetals is expected to generate 1.96 times less return on investment than Mount Gibson. In addition to that, Emetals is 4.64 times more volatile than Mount Gibson Iron. It trades about 0.04 of its total potential returns per unit of risk. Mount Gibson Iron is currently generating about 0.33 per unit of volatility. If you would invest 30.00 in Mount Gibson Iron on October 22, 2024 and sell it today you would earn a total of 3.00 from holding Mount Gibson Iron 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 |
Emetals vs. Mount Gibson Iron
Performance |
| Timeline |
| Emetals |
| Mount Gibson Iron |
Emetals and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emetals and Mount Gibson
The main advantage of trading using opposite Emetals and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emetals 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.| Emetals vs. Macquarie Bank Limited | Emetals vs. Medibank Private | Emetals vs. Commonwealth Bank of | Emetals vs. Saferoads Holdings |
| Mount Gibson vs. Talisman Mining | Mount Gibson vs. Peel Mining | Mount Gibson vs. Duketon Mining | Mount Gibson vs. Cleanaway Waste Management |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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