Correlation Between Firetail Resources and Charter Hall
Can any of the company-specific risk be diversified away by investing in both Firetail Resources and Charter Hall 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 Firetail Resources and Charter Hall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firetail Resources and Charter Hall Retail, you can compare the effects of market volatilities on Firetail Resources and Charter Hall 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 Firetail Resources with a short position of Charter Hall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firetail Resources and Charter Hall.
Diversification Opportunities for Firetail Resources and Charter Hall
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Firetail and Charter is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Firetail Resources and Charter Hall Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Hall Retail and Firetail Resources 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 Firetail Resources are associated (or correlated) with Charter Hall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Hall Retail has no effect on the direction of Firetail Resources i.e., Firetail Resources and Charter Hall go up and down completely randomly.
Pair Corralation between Firetail Resources and Charter Hall
Assuming the 90 days trading horizon Firetail Resources is expected to generate 8.22 times more return on investment than Charter Hall. However, Firetail Resources is 8.22 times more volatile than Charter Hall Retail. It trades about 0.02 of its potential returns per unit of risk. Charter Hall Retail is currently generating about 0.01 per unit of risk. If you would invest 17.00 in Firetail Resources on August 31, 2024 and sell it today you would lose (8.90) from holding Firetail Resources or give up 52.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firetail Resources vs. Charter Hall Retail
Performance |
| Timeline |
| Firetail Resources |
| Charter Hall Retail |
Firetail Resources and Charter Hall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firetail Resources and Charter Hall
The main advantage of trading using opposite Firetail Resources and Charter Hall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firetail Resources position performs unexpectedly, Charter Hall 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 Charter Hall will offset losses from the drop in Charter Hall's long position.| Firetail Resources vs. Northern Star Resources | Firetail Resources vs. Evolution Mining | Firetail Resources vs. Bluescope Steel | Firetail Resources vs. De Grey Mining |
| Charter Hall vs. Dexus Convenience Retail | Charter Hall vs. Super Retail Group | Charter Hall vs. Firetail Resources | Charter Hall vs. Future Generation Global |
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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