Correlation Between Falcon Metals and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and ACDC Metals 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 Falcon Metals and ACDC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and ACDC Metals, you can compare the effects of market volatilities on Falcon Metals and ACDC Metals 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 Falcon Metals with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and ACDC Metals.
Diversification Opportunities for Falcon Metals and ACDC Metals
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Falcon and ACDC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Falcon Metals 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 Falcon Metals are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Falcon Metals i.e., Falcon Metals and ACDC Metals go up and down completely randomly.
Pair Corralation between Falcon Metals and ACDC Metals
Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the ACDC Metals. In addition to that, Falcon Metals is 1.34 times more volatile than ACDC Metals. It trades about -0.04 of its total potential returns per unit of risk. ACDC Metals is currently generating about 0.03 per unit of volatility. If you would invest 5.60 in ACDC Metals on September 13, 2024 and sell it today you would earn a total of 0.30 from holding ACDC Metals or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. ACDC Metals
Performance |
| Timeline |
| Falcon Metals |
| ACDC Metals |
Falcon Metals and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and ACDC Metals
The main advantage of trading using opposite Falcon Metals and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, ACDC Metals 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Bluescope Steel | Falcon Metals vs. Sandfire Resources NL |
| ACDC Metals vs. Bank of Queensland | ACDC Metals vs. MA Financial Group | ACDC Metals vs. Finexia Financial Group | ACDC Metals vs. Prime Financial Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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