Correlation Between Fortescue Metals and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Aurelia Metals 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 Aurelia Metals 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 Aurelia Metals Limited, you can compare the effects of market volatilities on Fortescue Metals and Aurelia Metals 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 Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Aurelia Metals.
Diversification Opportunities for Fortescue Metals and Aurelia Metals
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Fortescue and Aurelia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Aurelia Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals 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 Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Aurelia Metals go up and down completely randomly.
Pair Corralation between Fortescue Metals and Aurelia Metals
If you would invest 1,100 in Fortescue Metals Group on November 9, 2024 and sell it today you would earn a total of 115.00 from holding Fortescue Metals Group or generate 10.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Fortescue Metals Group vs. Aurelia Metals Limited
Performance |
| Timeline |
| Fortescue Metals |
| Aurelia Metals |
Fortescue Metals and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Aurelia Metals
The main advantage of trading using opposite Fortescue Metals and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Aurelia Metals 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Qubec Nickel Corp | Fortescue Metals vs. Nickel Mines Limited | Fortescue Metals vs. Mineral Resources Limited |
| Aurelia Metals vs. Champion Bear Resources | Aurelia Metals vs. Baroyeca Gold Silver | Aurelia Metals vs. Centaurus Metals Limited | Aurelia Metals vs. Edison Cobalt 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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