Correlation Between Evolution Mining and Firetail Resources
Can any of the company-specific risk be diversified away by investing in both Evolution Mining and Firetail 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 Evolution Mining and Firetail Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Mining and Firetail Resources, you can compare the effects of market volatilities on Evolution Mining and Firetail 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 Evolution Mining with a short position of Firetail Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and Firetail Resources.
Diversification Opportunities for Evolution Mining and Firetail Resources
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Evolution and Firetail is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and Firetail Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firetail Resources and Evolution Mining 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 Evolution Mining are associated (or correlated) with Firetail Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firetail Resources has no effect on the direction of Evolution Mining i.e., Evolution Mining and Firetail Resources go up and down completely randomly.
Pair Corralation between Evolution Mining and Firetail Resources
Assuming the 90 days trading horizon Evolution Mining is expected to generate 0.32 times more return on investment than Firetail Resources. However, Evolution Mining is 3.1 times less risky than Firetail Resources. It trades about -0.02 of its potential returns per unit of risk. Firetail Resources is currently generating about -0.26 per unit of risk. If you would invest 513.00 in Evolution Mining on September 2, 2024 and sell it today you would lose (7.00) from holding Evolution Mining or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution Mining vs. Firetail Resources
Performance |
| Timeline |
| Evolution Mining |
| Firetail Resources |
Evolution Mining and Firetail Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution Mining and Firetail Resources
The main advantage of trading using opposite Evolution Mining and Firetail Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining position performs unexpectedly, Firetail 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 Firetail Resources will offset losses from the drop in Firetail Resources' long position.| Evolution Mining vs. Hutchison Telecommunications | Evolution Mining vs. Red Hill Iron | Evolution Mining vs. Legacy Iron Ore | Evolution Mining vs. Autosports Group |
| Firetail Resources vs. Northern Star Resources | Firetail Resources vs. Evolution Mining | Firetail Resources vs. Bluescope Steel | Firetail Resources 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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