Correlation Between Fortescue Metals and Keweenaw Land
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Keweenaw Land 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 Metals and Keweenaw Land into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and Keweenaw Land Association, you can compare the effects of market volatilities on Fortescue Metals and Keweenaw Land 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 Metals with a short position of Keweenaw Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Keweenaw Land.
Diversification Opportunities for Fortescue Metals and Keweenaw Land
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortescue and Keweenaw is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Keweenaw Land Association in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keweenaw Land Association and Fortescue 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 Fortescue Metals Group are associated (or correlated) with Keweenaw Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keweenaw Land Association has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Keweenaw Land go up and down completely randomly.
Pair Corralation between Fortescue Metals and Keweenaw Land
Assuming the 90 days horizon Fortescue Metals Group is expected to under-perform the Keweenaw Land. But the otc stock apears to be less risky and, when comparing its historical volatility, Fortescue Metals Group is 1.85 times less risky than Keweenaw Land. The otc stock trades about -0.09 of its potential returns per unit of risk. The Keweenaw Land Association is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,600 in Keweenaw Land Association on August 25, 2024 and sell it today you would earn a total of 152.00 from holding Keweenaw Land Association or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Keweenaw Land Association
Performance |
| Timeline |
| Fortescue Metals |
| Keweenaw Land Association |
Fortescue Metals and Keweenaw Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Keweenaw Land
The main advantage of trading using opposite Fortescue Metals and Keweenaw Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Keweenaw Land 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 Keweenaw Land will offset losses from the drop in Keweenaw Land's long position.| Fortescue Metals vs. Norra Metals Corp | Fortescue Metals vs. ZincX Resources Corp | Fortescue Metals vs. Nuinsco Resources Limited | Fortescue Metals vs. South Star Battery |
| Keweenaw Land vs. Anglo American plc | Keweenaw Land vs. Glencore PLC ADR | Keweenaw Land vs. Fortescue Metals Group | Keweenaw Land vs. South32 Limited |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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