Correlation Between Fortescue Metals and Eskay Mining
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Eskay 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 Fortescue Metals and Eskay Mining 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 Eskay Mining Corp, you can compare the effects of market volatilities on Fortescue Metals and Eskay 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 Fortescue Metals with a short position of Eskay Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Eskay Mining.
Diversification Opportunities for Fortescue Metals and Eskay Mining
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortescue and Eskay is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Eskay Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eskay Mining Corp 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 Eskay Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eskay Mining Corp has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Eskay Mining go up and down completely randomly.
Pair Corralation between Fortescue Metals and Eskay Mining
Assuming the 90 days horizon Fortescue Metals Group is expected to generate 0.34 times more return on investment than Eskay Mining. However, Fortescue Metals Group is 2.93 times less risky than Eskay Mining. It trades about 0.01 of its potential returns per unit of risk. Eskay Mining Corp is currently generating about -0.02 per unit of risk. If you would invest 1,055 in Fortescue Metals Group on October 16, 2024 and sell it today you would earn a total of 28.00 from holding Fortescue Metals Group or generate 2.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Eskay Mining Corp
Performance |
| Timeline |
| Fortescue Metals |
| Eskay Mining Corp |
Fortescue Metals and Eskay Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Eskay Mining
The main advantage of trading using opposite Fortescue Metals and Eskay Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Eskay 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 Eskay Mining will offset losses from the drop in Eskay Mining's long position.| Fortescue Metals vs. DETALION GAMES SA | Fortescue Metals vs. Cal Maine Foods | Fortescue Metals vs. BORR DRILLING NEW | Fortescue Metals vs. Major Drilling Group |
| Eskay Mining vs. KINGBOARD CHEMICAL | Eskay Mining vs. Tianjin Capital Environmental | Eskay Mining vs. Khiron Life Sciences | Eskay Mining vs. SEKISUI CHEMICAL |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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