Correlation Between Zijin Mining and Darden Restaurants
Can any of the company-specific risk be diversified away by investing in both Zijin Mining and Darden Restaurants 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 Zijin Mining and Darden Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zijin Mining Group and Darden Restaurants, you can compare the effects of market volatilities on Zijin Mining and Darden Restaurants 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 Zijin Mining with a short position of Darden Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and Darden Restaurants.
Diversification Opportunities for Zijin Mining and Darden Restaurants
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Zijin and Darden is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining Group and Darden Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darden Restaurants and Zijin Mining 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 Zijin Mining Group are associated (or correlated) with Darden Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darden Restaurants has no effect on the direction of Zijin Mining i.e., Zijin Mining and Darden Restaurants go up and down completely randomly.
Pair Corralation between Zijin Mining and Darden Restaurants
Assuming the 90 days horizon Zijin Mining is expected to generate 2.94 times less return on investment than Darden Restaurants. In addition to that, Zijin Mining is 2.29 times more volatile than Darden Restaurants. It trades about 0.02 of its total potential returns per unit of risk. Darden Restaurants is currently generating about 0.12 per unit of volatility. If you would invest 13,274 in Darden Restaurants on August 29, 2024 and sell it today you would earn a total of 3,321 from holding Darden Restaurants or generate 25.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. Darden Restaurants
Performance |
| Timeline |
| Zijin Mining Group |
| Darden Restaurants |
Zijin Mining and Darden Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and Darden Restaurants
The main advantage of trading using opposite Zijin Mining and Darden Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining position performs unexpectedly, Darden Restaurants 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 Darden Restaurants will offset losses from the drop in Darden Restaurants' long position.| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Vale SA |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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