Correlation Between Finlay Minerals and Zephyr Minerals
Can any of the company-specific risk be diversified away by investing in both Finlay Minerals and Zephyr Minerals 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 Zephyr Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finlay Minerals and Zephyr Minerals, you can compare the effects of market volatilities on Finlay Minerals and Zephyr Minerals 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 Zephyr Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finlay Minerals and Zephyr Minerals.
Diversification Opportunities for Finlay Minerals and Zephyr Minerals
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Finlay and Zephyr is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Finlay Minerals and Zephyr Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zephyr Minerals 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 Zephyr Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zephyr Minerals has no effect on the direction of Finlay Minerals i.e., Finlay Minerals and Zephyr Minerals go up and down completely randomly.
Pair Corralation between Finlay Minerals and Zephyr Minerals
Assuming the 90 days horizon Finlay Minerals is expected to generate 1.53 times more return on investment than Zephyr Minerals. However, Finlay Minerals is 1.53 times more volatile than Zephyr Minerals. It trades about 0.07 of its potential returns per unit of risk. Zephyr Minerals is currently generating about -0.01 per unit of risk. If you would invest 2.00 in Finlay Minerals on August 26, 2024 and sell it today you would earn a total of 1.00 from holding Finlay Minerals or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finlay Minerals vs. Zephyr Minerals
Performance |
| Timeline |
| Finlay Minerals |
| Zephyr Minerals |
Finlay Minerals and Zephyr Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finlay Minerals and Zephyr Minerals
The main advantage of trading using opposite Finlay Minerals and Zephyr Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finlay Minerals position performs unexpectedly, Zephyr Minerals 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 Zephyr Minerals will offset losses from the drop in Zephyr Minerals' long position.| Finlay Minerals vs. First Majestic Silver | Finlay Minerals vs. Ivanhoe Energy | Finlay Minerals vs. Orezone Gold Corp | Finlay Minerals vs. Faraday Copper Corp |
| Zephyr Minerals vs. Zonte Metals | Zephyr Minerals vs. Highway 50 Gold | Zephyr Minerals vs. Opus One Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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