Correlation Between Finlay Minerals and Transatlantic Mining
Can any of the company-specific risk be diversified away by investing in both Finlay Minerals and Transatlantic 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 Finlay Minerals and Transatlantic Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finlay Minerals and Transatlantic Mining Corp, you can compare the effects of market volatilities on Finlay Minerals and Transatlantic 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 Finlay Minerals with a short position of Transatlantic Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finlay Minerals and Transatlantic Mining.
Diversification Opportunities for Finlay Minerals and Transatlantic Mining
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finlay and Transatlantic is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Finlay Minerals and Transatlantic Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transatlantic Mining Corp and Finlay Minerals 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 Finlay Minerals are associated (or correlated) with Transatlantic Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transatlantic Mining Corp has no effect on the direction of Finlay Minerals i.e., Finlay Minerals and Transatlantic Mining go up and down completely randomly.
Pair Corralation between Finlay Minerals and Transatlantic Mining
Assuming the 90 days horizon Finlay Minerals is expected to generate 1.93 times less return on investment than Transatlantic Mining. In addition to that, Finlay Minerals is 1.05 times more volatile than Transatlantic Mining Corp. It trades about 0.04 of its total potential returns per unit of risk. Transatlantic Mining Corp is currently generating about 0.08 per unit of volatility. If you would invest 2.00 in Transatlantic Mining Corp on August 25, 2024 and sell it today you would earn a total of 9.00 from holding Transatlantic Mining Corp or generate 450.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finlay Minerals vs. Transatlantic Mining Corp
Performance |
| Timeline |
| Finlay Minerals |
| Transatlantic Mining Corp |
Finlay Minerals and Transatlantic Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finlay Minerals and Transatlantic Mining
The main advantage of trading using opposite Finlay Minerals and Transatlantic Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finlay Minerals position performs unexpectedly, Transatlantic 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 Transatlantic Mining will offset losses from the drop in Transatlantic Mining's long position.| Finlay Minerals vs. CMC Metals | Finlay Minerals vs. Tarku Resources | Finlay Minerals vs. Highway 50 Gold |
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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