Correlation Between US Financial and Millbank Mining
Can any of the company-specific risk be diversified away by investing in both US Financial and Millbank Mining 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 US Financial and Millbank Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Financial 15 and Millbank Mining Corp, you can compare the effects of market volatilities on US Financial and Millbank Mining 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 US Financial with a short position of Millbank Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Millbank Mining.
Diversification Opportunities for US Financial and Millbank Mining
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FTU-PB and Millbank is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Millbank Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millbank Mining Corp and US Financial 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 US Financial 15 are associated (or correlated) with Millbank Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millbank Mining Corp has no effect on the direction of US Financial i.e., US Financial and Millbank Mining go up and down completely randomly.
Pair Corralation between US Financial and Millbank Mining
Assuming the 90 days trading horizon US Financial 15 is expected to under-perform the Millbank Mining. But the preferred stock apears to be less risky and, when comparing its historical volatility, US Financial 15 is 2.73 times less risky than Millbank Mining. The preferred stock trades about -0.17 of its potential returns per unit of risk. The Millbank Mining Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 44.00 in Millbank Mining Corp on October 1, 2024 and sell it today you would earn a total of 4.00 from holding Millbank Mining Corp or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Financial 15 vs. Millbank Mining Corp
Performance |
| Timeline |
| US Financial 15 |
| Millbank Mining Corp |
US Financial and Millbank Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Financial and Millbank Mining
The main advantage of trading using opposite US Financial and Millbank Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial position performs unexpectedly, Millbank Mining 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 Millbank Mining will offset losses from the drop in Millbank Mining's long position.| US Financial vs. Brookfield Infrastructure Partners | US Financial vs. Brookfield Office Properties | US Financial vs. Brookfield Office Properties | US Financial vs. Brookfield Infrastructure Partners |
| Millbank Mining vs. CNJ Capital Investments | Millbank Mining vs. Queens Road Capital | Millbank Mining vs. Westshore Terminals Investment | Millbank Mining vs. Atrium Mortgage Investment |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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