Correlation Between Fortescue Metals and Mineral Resources
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Mineral Resources 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 Mineral Resources 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 Mineral Resources Limited, you can compare the effects of market volatilities on Fortescue Metals and Mineral Resources 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 Mineral Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Mineral Resources.
Diversification Opportunities for Fortescue Metals and Mineral Resources
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fortescue and Mineral is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Mineral Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources 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 Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Mineral Resources go up and down completely randomly.
Pair Corralation between Fortescue Metals and Mineral Resources
Assuming the 90 days horizon Fortescue Metals Group is expected to generate 0.74 times more return on investment than Mineral Resources. However, Fortescue Metals Group is 1.35 times less risky than Mineral Resources. It trades about -0.01 of its potential returns per unit of risk. Mineral Resources Limited is currently generating about -0.1 per unit of risk. If you would invest 2,497 in Fortescue Metals Group on September 1, 2024 and sell it today you would lose (26.00) from holding Fortescue Metals Group or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Mineral Resources Limited
Performance |
| Timeline |
| Fortescue Metals |
| Mineral Resources |
Fortescue Metals and Mineral Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Mineral Resources
The main advantage of trading using opposite Fortescue Metals and Mineral Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Mineral Resources 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 Mineral Resources will offset losses from the drop in Mineral Resources' long position.| Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Qubec Nickel Corp | Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Hannan Metals |
| Mineral Resources vs. IGO Limited | Mineral Resources vs. Qubec Nickel Corp | Mineral Resources vs. Nickel Mines Limited | Mineral Resources vs. Surge Copper Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |