Correlation Between Fortescue and British Amer
Can any of the company-specific risk be diversified away by investing in both Fortescue and British Amer 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 Fortescue and British Amer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue and Bailador Technology Invest, you can compare the effects of market volatilities on Fortescue and British Amer 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 Fortescue with a short position of British Amer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue and British Amer.
Diversification Opportunities for Fortescue and British Amer
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fortescue and British is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue and Bailador Technology Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bailador Technology and Fortescue 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 Fortescue are associated (or correlated) with British Amer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bailador Technology has no effect on the direction of Fortescue i.e., Fortescue and British Amer go up and down completely randomly.
Pair Corralation between Fortescue and British Amer
Assuming the 90 days trading horizon Fortescue is expected to under-perform the British Amer. In addition to that, Fortescue is 1.97 times more volatile than Bailador Technology Invest. It trades about -0.04 of its total potential returns per unit of risk. Bailador Technology Invest is currently generating about 0.04 per unit of volatility. If you would invest 124.00 in Bailador Technology Invest on November 27, 2024 and sell it today you would earn a total of 1.00 from holding Bailador Technology Invest or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue vs. Bailador Technology Invest
Performance |
| Timeline |
| Fortescue |
| Bailador Technology |
Fortescue and British Amer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue and British Amer
The main advantage of trading using opposite Fortescue and British Amer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue position performs unexpectedly, British Amer 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 British Amer will offset losses from the drop in British Amer's long position.| Fortescue vs. Gateway Mining | Fortescue vs. Diversified United Investment | Fortescue vs. National Storage REIT | Fortescue vs. Ora Banda Mining |
| British Amer vs. Skycity Entertainment Group | British Amer vs. Champion Iron | British Amer vs. TPG Telecom | British Amer vs. Autosports Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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