Correlation Between Falcon Metals and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Stelar 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 Stelar 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 Stelar Metals, you can compare the effects of market volatilities on Falcon Metals and Stelar 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 Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Stelar Metals.
Diversification Opportunities for Falcon Metals and Stelar Metals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and Stelar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Falcon Metals i.e., Falcon Metals and Stelar Metals go up and down completely randomly.
Pair Corralation between Falcon Metals and Stelar Metals
Assuming the 90 days trading horizon Falcon Metals is expected to generate 1.66 times more return on investment than Stelar Metals. However, Falcon Metals is 1.66 times more volatile than Stelar Metals. It trades about 0.02 of its potential returns per unit of risk. Stelar Metals 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Stelar Metals
Performance |
| Timeline |
| Falcon Metals |
| Stelar Metals |
Falcon Metals and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Stelar Metals
The main advantage of trading using opposite Falcon Metals and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Stelar 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 Stelar Metals will offset losses from the drop in Stelar 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 |
| Stelar Metals vs. Embark Education Group | Stelar Metals vs. Home Consortium | Stelar Metals vs. Land Homes Group | Stelar Metals vs. Actinogen Medical |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |