Correlation Between Flinders Resources and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both Flinders Resources and Labrador Iron 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 Flinders Resources and Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flinders Resources Limited and Labrador Iron Ore, you can compare the effects of market volatilities on Flinders Resources and Labrador Iron 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 Flinders Resources with a short position of Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flinders Resources and Labrador Iron.
Diversification Opportunities for Flinders Resources and Labrador Iron
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flinders and Labrador is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Flinders Resources Limited and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and Flinders Resources 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 Flinders Resources Limited are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Flinders Resources i.e., Flinders Resources and Labrador Iron go up and down completely randomly.
Pair Corralation between Flinders Resources and Labrador Iron
Assuming the 90 days horizon Flinders Resources Limited is expected to generate 3.1 times more return on investment than Labrador Iron. However, Flinders Resources is 3.1 times more volatile than Labrador Iron Ore. It trades about 0.24 of its potential returns per unit of risk. Labrador Iron Ore is currently generating about 0.26 per unit of risk. If you would invest 440.00 in Flinders Resources Limited on October 20, 2024 and sell it today you would earn a total of 78.00 from holding Flinders Resources Limited or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flinders Resources Limited vs. Labrador Iron Ore
Performance |
| Timeline |
| Flinders Resources |
| Labrador Iron Ore |
Flinders Resources and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flinders Resources and Labrador Iron
The main advantage of trading using opposite Flinders Resources and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flinders Resources position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| Flinders Resources vs. Champion Gaming Group | Flinders Resources vs. Dream Office Real | Flinders Resources vs. NextSource Materials | Flinders Resources vs. Rogers Communications |
| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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