Correlation Between Fortescue Metals and Transport International
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Transport International 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 Transport International 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 Transport International Holdings, you can compare the effects of market volatilities on Fortescue Metals and Transport International 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 Transport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Transport International.
Diversification Opportunities for Fortescue Metals and Transport International
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortescue and Transport is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Transport International Holdin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport International 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 Transport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport International has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Transport International go up and down completely randomly.
Pair Corralation between Fortescue Metals and Transport International
Assuming the 90 days horizon Fortescue Metals Group is expected to under-perform the Transport International. In addition to that, Fortescue Metals is 1.35 times more volatile than Transport International Holdings. It trades about -0.44 of its total potential returns per unit of risk. Transport International Holdings is currently generating about 0.01 per unit of volatility. If you would invest 95.00 in Transport International Holdings on October 12, 2024 and sell it today you would earn a total of 0.00 from holding Transport International Holdings or generate 0.0% 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. Transport International Holdin
Performance |
| Timeline |
| Fortescue Metals |
| Transport International |
Fortescue Metals and Transport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Transport International
The main advantage of trading using opposite Fortescue Metals and Transport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Transport International 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 Transport International will offset losses from the drop in Transport International's long position.| Fortescue Metals vs. Sinopec Shanghai Petrochemical | Fortescue Metals vs. Mitsui Chemicals | Fortescue Metals vs. EBRO FOODS | Fortescue Metals vs. X FAB Silicon Foundries |
| Transport International vs. Zoom Video Communications | Transport International vs. VIVA WINE GROUP | Transport International vs. SENECA FOODS A | Transport International vs. NAKED WINES PLC |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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