Correlation Between Finning International and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both Finning International and Labrador Iron 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 Finning International and Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finning International and Labrador Iron Ore, you can compare the effects of market volatilities on Finning International and Labrador Iron 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 Finning International with a short position of Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finning International and Labrador Iron.
Diversification Opportunities for Finning International and Labrador Iron
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Finning and Labrador is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Finning International and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and Finning International 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 Finning International are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of Finning International i.e., Finning International and Labrador Iron go up and down completely randomly.
Pair Corralation between Finning International and Labrador Iron
Assuming the 90 days trading horizon Finning International is expected to under-perform the Labrador Iron. In addition to that, Finning International is 1.87 times more volatile than Labrador Iron Ore. It trades about -0.1 of its total potential returns per unit of risk. Labrador Iron Ore is currently generating about -0.09 per unit of volatility. If you would invest 3,046 in Labrador Iron Ore on September 1, 2024 and sell it today you would lose (80.00) from holding Labrador Iron Ore or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finning International vs. Labrador Iron Ore
Performance |
| Timeline |
| Finning International |
| Labrador Iron Ore |
Finning International and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finning International and Labrador Iron
The main advantage of trading using opposite Finning International and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finning International position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |