Correlation Between Falcon Metals and Seven West
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Seven West 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 Seven West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and Seven West Media, you can compare the effects of market volatilities on Falcon Metals and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Seven West.
Diversification Opportunities for Falcon Metals and Seven West
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Falcon and Seven is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Falcon Metals i.e., Falcon Metals and Seven West go up and down completely randomly.
Pair Corralation between Falcon Metals and Seven West
Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the Seven West. In addition to that, Falcon Metals is 1.9 times more volatile than Seven West Media. It trades about -0.04 of its total potential returns per unit of risk. Seven West Media is currently generating about -0.04 per unit of volatility. If you would invest 18.00 in Seven West Media on September 13, 2024 and sell it today you would lose (4.00) from holding Seven West Media or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Metals vs. Seven West Media
Performance |
| Timeline |
| Falcon Metals |
| Seven West Media |
Falcon Metals and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Metals and Seven West
The main advantage of trading using opposite Falcon Metals and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West'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 |
| Seven West vs. Beston Global Food | Seven West vs. IDP Education | Seven West vs. Environmental Clean Technologies | Seven West vs. Carnegie Clean Energy |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |