Correlation Between Ferrexpo PLC and Rockfire Resources
Can any of the company-specific risk be diversified away by investing in both Ferrexpo PLC and Rockfire Resources 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 Ferrexpo PLC and Rockfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ferrexpo PLC and Rockfire Resources plc, you can compare the effects of market volatilities on Ferrexpo PLC and Rockfire Resources 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 Ferrexpo PLC with a short position of Rockfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ferrexpo PLC and Rockfire Resources.
Diversification Opportunities for Ferrexpo PLC and Rockfire Resources
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ferrexpo and Rockfire is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ferrexpo PLC and Rockfire Resources plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockfire Resources plc and Ferrexpo PLC 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 Ferrexpo PLC are associated (or correlated) with Rockfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockfire Resources plc has no effect on the direction of Ferrexpo PLC i.e., Ferrexpo PLC and Rockfire Resources go up and down completely randomly.
Pair Corralation between Ferrexpo PLC and Rockfire Resources
Assuming the 90 days trading horizon Ferrexpo PLC is expected to under-perform the Rockfire Resources. But the stock apears to be less risky and, when comparing its historical volatility, Ferrexpo PLC is 1.31 times less risky than Rockfire Resources. The stock trades about -0.01 of its potential returns per unit of risk. The Rockfire Resources plc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Rockfire Resources plc on August 24, 2024 and sell it today you would lose (6.00) from holding Rockfire Resources plc or give up 35.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.97% |
| Values | Daily Returns |
Ferrexpo PLC vs. Rockfire Resources plc
Performance |
| Timeline |
| Ferrexpo PLC |
| Rockfire Resources plc |
Ferrexpo PLC and Rockfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ferrexpo PLC and Rockfire Resources
The main advantage of trading using opposite Ferrexpo PLC and Rockfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ferrexpo PLC position performs unexpectedly, Rockfire Resources 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 Rockfire Resources will offset losses from the drop in Rockfire Resources' long position.| Ferrexpo PLC vs. Givaudan SA | Ferrexpo PLC vs. Antofagasta PLC | Ferrexpo PLC vs. Centamin PLC | Ferrexpo PLC vs. Atalaya Mining |
| Rockfire Resources vs. Cognizant Technology Solutions | Rockfire Resources vs. Sabien Technology Group | Rockfire Resources vs. Ebro Foods | Rockfire Resources vs. Veolia Environnement VE |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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