Correlation Between Economic Investment and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both Economic Investment and Labrador Iron 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 Economic Investment and Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Economic Investment Trust and Labrador Iron Ore, you can compare the effects of market volatilities on Economic Investment and Labrador Iron 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 Economic Investment with a short position of Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Economic Investment and Labrador Iron.
Diversification Opportunities for Economic Investment and Labrador Iron
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Economic and Labrador is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Economic Investment Trust and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and Economic Investment 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 Economic Investment Trust are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Economic Investment i.e., Economic Investment and Labrador Iron go up and down completely randomly.
Pair Corralation between Economic Investment and Labrador Iron
Assuming the 90 days trading horizon Economic Investment Trust is expected to generate 0.48 times more return on investment than Labrador Iron. However, Economic Investment Trust is 2.1 times less risky than Labrador Iron. It trades about 0.41 of its potential returns per unit of risk. Labrador Iron Ore is currently generating about -0.22 per unit of risk. If you would invest 16,525 in Economic Investment Trust on August 28, 2024 and sell it today you would earn a total of 925.00 from holding Economic Investment Trust or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Economic Investment Trust vs. Labrador Iron Ore
Performance |
| Timeline |
| Economic Investment Trust |
| Labrador Iron Ore |
Economic Investment and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Economic Investment and Labrador Iron
The main advantage of trading using opposite Economic Investment and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Economic Investment position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest Group |
| Labrador Iron vs. First Majestic Silver | Labrador Iron vs. Ivanhoe Energy | Labrador Iron vs. Orezone Gold Corp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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