Correlation Between Fortescue Metals and DISTRICT METALS
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and DISTRICT 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 DISTRICT 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 DISTRICT METALS, you can compare the effects of market volatilities on Fortescue Metals and DISTRICT 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 DISTRICT METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and DISTRICT METALS.
Diversification Opportunities for Fortescue Metals and DISTRICT METALS
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortescue and DISTRICT is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and DISTRICT METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DISTRICT 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 DISTRICT METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DISTRICT METALS has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and DISTRICT METALS go up and down completely randomly.
Pair Corralation between Fortescue Metals and DISTRICT METALS
Assuming the 90 days horizon Fortescue Metals Group is expected to generate 0.73 times more return on investment than DISTRICT METALS. However, Fortescue Metals Group is 1.37 times less risky than DISTRICT METALS. It trades about 0.08 of its potential returns per unit of risk. DISTRICT METALS is currently generating about -0.07 per unit of risk. If you would invest 1,110 in Fortescue Metals Group on October 29, 2024 and sell it today you would earn a total of 29.00 from holding Fortescue Metals Group or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. DISTRICT METALS
Performance |
| Timeline |
| Fortescue Metals |
| DISTRICT METALS |
Fortescue Metals and DISTRICT METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and DISTRICT METALS
The main advantage of trading using opposite Fortescue Metals and DISTRICT METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, DISTRICT 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 DISTRICT METALS will offset losses from the drop in DISTRICT METALS's long position.| Fortescue Metals vs. Martin Marietta Materials | Fortescue Metals vs. NEWELL RUBBERMAID | Fortescue Metals vs. Materialise NV | Fortescue Metals vs. CREO MEDICAL GRP |
| DISTRICT METALS vs. NORWEGIAN AIR SHUT | DISTRICT METALS vs. TAL Education Group | DISTRICT METALS vs. Corsair Gaming | DISTRICT METALS vs. Westinghouse Air Brake |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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