Correlation Between Falcon Metals and Bluescope Steel
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Bluescope Steel 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 Bluescope Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Bluescope Steel, you can compare the effects of market volatilities on Falcon Metals and Bluescope Steel 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 Bluescope Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Bluescope Steel.
Diversification Opportunities for Falcon Metals and Bluescope Steel
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Falcon and Bluescope is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Bluescope Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bluescope Steel 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 Bluescope Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bluescope Steel has no effect on the direction of Falcon Metals i.e., Falcon Metals and Bluescope Steel go up and down completely randomly.
Pair Corralation between Falcon Metals and Bluescope Steel
Assuming the 90 days trading horizon Falcon Metals is expected to generate 2.27 times more return on investment than Bluescope Steel. However, Falcon Metals is 2.27 times more volatile than Bluescope Steel. It trades about 0.02 of its potential returns per unit of risk. Bluescope Steel is currently generating about -0.01 per unit of risk. If you would invest 14.00 in Falcon Metals on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Falcon Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Bluescope Steel
Performance |
| Timeline |
| Falcon Metals |
| Bluescope Steel |
Falcon Metals and Bluescope Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Bluescope Steel
The main advantage of trading using opposite Falcon Metals and Bluescope Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Bluescope Steel 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 Bluescope Steel will offset losses from the drop in Bluescope Steel's long position.| Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Bluescope Steel | Falcon Metals vs. Sandfire Resources NL |
| Bluescope Steel vs. My Foodie Box | Bluescope Steel vs. Retail Food Group | Bluescope Steel vs. Perseus Mining | Bluescope Steel vs. Autosports 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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