Correlation Between Fortescue Metals and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals and Retail Estates 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 Retail Estates 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 Retail Estates NV, you can compare the effects of market volatilities on Fortescue Metals and Retail Estates 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 Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Retail Estates.
Diversification Opportunities for Fortescue Metals and Retail Estates
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fortescue and Retail is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and Retail Estates go up and down completely randomly.
Pair Corralation between Fortescue Metals and Retail Estates
Assuming the 90 days horizon Fortescue Metals Group is expected to under-perform the Retail Estates. In addition to that, Fortescue Metals is 1.52 times more volatile than Retail Estates NV. It trades about -0.31 of its total potential returns per unit of risk. Retail Estates NV is currently generating about -0.06 per unit of volatility. If you would invest 5,770 in Retail Estates NV on October 14, 2024 and sell it today you would lose (70.00) from holding Retail Estates NV or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Retail Estates NV
Performance |
| Timeline |
| Fortescue Metals |
| Retail Estates NV |
Fortescue Metals and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Retail Estates
The main advantage of trading using opposite Fortescue Metals and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Fortescue Metals vs. Vale SA | Fortescue Metals vs. Glencore plc | Fortescue Metals vs. Superior Plus Corp | Fortescue Metals vs. NMI Holdings |
| Retail Estates vs. INTERNET INJPADR 1 | Retail Estates vs. Zoom Video Communications | Retail Estates vs. Fortescue Metals Group | Retail Estates vs. Jacquet Metal Service |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| CEOs Directory Screen CEOs from public companies around the world |