Correlation Between Errawarra Resources and IXUP
Can any of the company-specific risk be diversified away by investing in both Errawarra Resources and IXUP 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 Errawarra Resources and IXUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Errawarra Resources and IXUP, you can compare the effects of market volatilities on Errawarra Resources and IXUP 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 Errawarra Resources with a short position of IXUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Errawarra Resources and IXUP.
Diversification Opportunities for Errawarra Resources and IXUP
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Errawarra and IXUP is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Errawarra Resources and IXUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IXUP and Errawarra Resources 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 Errawarra Resources are associated (or correlated) with IXUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IXUP has no effect on the direction of Errawarra Resources i.e., Errawarra Resources and IXUP go up and down completely randomly.
Pair Corralation between Errawarra Resources and IXUP
Assuming the 90 days trading horizon Errawarra Resources is expected to under-perform the IXUP. But the stock apears to be less risky and, when comparing its historical volatility, Errawarra Resources is 1.48 times less risky than IXUP. The stock trades about -0.2 of its potential returns per unit of risk. The IXUP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.90 in IXUP on November 22, 2024 and sell it today you would earn a total of 0.10 from holding IXUP or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Errawarra Resources vs. IXUP
Performance |
| Timeline |
| Errawarra Resources |
| IXUP |
Errawarra Resources and IXUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Errawarra Resources and IXUP
The main advantage of trading using opposite Errawarra Resources and IXUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Errawarra Resources position performs unexpectedly, IXUP 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 IXUP will offset losses from the drop in IXUP's long position.| Errawarra Resources vs. Ras Technology Holdings | Errawarra Resources vs. Argo Investments | Errawarra Resources vs. Pinnacle Investment Management | Errawarra Resources vs. Australian Unity Office |
| IXUP vs. Charter Hall Retail | IXUP vs. Maggie Beer Holdings | IXUP vs. EMvision Medical Devices | IXUP vs. Ainsworth Game Technology |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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