Correlation Between Falcon Metals and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Insignia Financial 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 Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Insignia Financial, you can compare the effects of market volatilities on Falcon Metals and Insignia Financial 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 Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Insignia Financial.
Diversification Opportunities for Falcon Metals and Insignia Financial
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Falcon and Insignia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial 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 Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Falcon Metals i.e., Falcon Metals and Insignia Financial go up and down completely randomly.
Pair Corralation between Falcon Metals and Insignia Financial
Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the Insignia Financial. In addition to that, Falcon Metals is 1.8 times more volatile than Insignia Financial. It trades about -0.11 of its total potential returns per unit of risk. Insignia Financial is currently generating about 0.24 per unit of volatility. If you would invest 308.00 in Insignia Financial on October 7, 2024 and sell it today you would earn a total of 46.00 from holding Insignia Financial or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Insignia Financial
Performance |
| Timeline |
| Falcon Metals |
| Insignia Financial |
Falcon Metals and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Insignia Financial
The main advantage of trading using opposite Falcon Metals and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Bluescope Steel | Falcon Metals vs. De Grey Mining |
| Insignia Financial vs. Commonwealth Bank of | Insignia Financial vs. Champion Iron | Insignia Financial vs. Peel Mining | Insignia Financial vs. Australian Dairy Farms |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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