Correlation Between Fortescue Metals and Marks
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Marks 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 Marks 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 Marks and Spencer, you can compare the effects of market volatilities on Fortescue Metals and Marks 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 Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Marks.
Diversification Opportunities for Fortescue Metals and Marks
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Fortescue and Marks is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer 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 Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Marks go up and down completely randomly.
Pair Corralation between Fortescue Metals and Marks
Assuming the 90 days horizon Fortescue Metals Group is expected to under-perform the Marks. In addition to that, Fortescue Metals is 1.54 times more volatile than Marks and Spencer. It trades about -0.32 of its total potential returns per unit of risk. Marks and Spencer is currently generating about -0.11 per unit of volatility. If you would invest 474.00 in Marks and Spencer on October 10, 2024 and sell it today you would lose (13.00) from holding Marks and Spencer or give up 2.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Marks and Spencer
Performance |
| Timeline |
| Fortescue Metals |
| Marks and Spencer |
Fortescue Metals and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Marks
The main advantage of trading using opposite Fortescue Metals and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| Fortescue Metals vs. Hanison Construction Holdings | Fortescue Metals vs. Australian Agricultural | Fortescue Metals vs. TYSON FOODS A | Fortescue Metals vs. CN MODERN DAIRY |
| Marks vs. MIRAMAR HOTEL INV | Marks vs. TRADEDOUBLER AB SK | Marks vs. Fast Retailing Co | Marks vs. Choice Hotels International |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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