Correlation Between Friedman Industries and Mesabi Trust
Can any of the company-specific risk be diversified away by investing in both Friedman Industries and Mesabi Trust 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 Friedman Industries and Mesabi Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Friedman Industries and Mesabi Trust, you can compare the effects of market volatilities on Friedman Industries and Mesabi Trust 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 Friedman Industries with a short position of Mesabi Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Friedman Industries and Mesabi Trust.
Diversification Opportunities for Friedman Industries and Mesabi Trust
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Friedman and Mesabi is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Friedman Industries and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust and Friedman Industries 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 Friedman Industries are associated (or correlated) with Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of Friedman Industries i.e., Friedman Industries and Mesabi Trust go up and down completely randomly.
Pair Corralation between Friedman Industries and Mesabi Trust
Considering the 90-day investment horizon Friedman Industries is expected to generate 1.36 times more return on investment than Mesabi Trust. However, Friedman Industries is 1.36 times more volatile than Mesabi Trust. It trades about 0.05 of its potential returns per unit of risk. Mesabi Trust is currently generating about 0.05 per unit of risk. If you would invest 988.00 in Friedman Industries on August 31, 2024 and sell it today you would earn a total of 535.00 from holding Friedman Industries or generate 54.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Friedman Industries vs. Mesabi Trust
Performance |
| Timeline |
| Friedman Industries |
| Mesabi Trust |
Friedman Industries and Mesabi Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Friedman Industries and Mesabi Trust
The main advantage of trading using opposite Friedman Industries and Mesabi Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Friedman Industries position performs unexpectedly, Mesabi Trust 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 Mesabi Trust will offset losses from the drop in Mesabi Trust's long position.| Friedman Industries vs. ArcelorMittal SA | Friedman Industries vs. Aperam PK | Friedman Industries vs. Acerinox SA ADR | Friedman Industries vs. Algoma Steel Group |
| Mesabi Trust vs. Olympic Steel | Mesabi Trust vs. Universal Stainless Alloy | Mesabi Trust vs. POSCO Holdings | Mesabi Trust vs. Outokumpu Oyj ADR |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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