Correlation Between ETFS Physical and Champion Iron
Can any of the company-specific risk be diversified away by investing in both ETFS Physical and Champion Iron 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 ETFS Physical and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFS Physical Gold and Champion Iron, you can compare the effects of market volatilities on ETFS Physical and Champion Iron 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 ETFS Physical with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Physical and Champion Iron.
Diversification Opportunities for ETFS Physical and Champion Iron
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between ETFS and Champion is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Physical Gold and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and ETFS Physical 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 ETFS Physical Gold are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of ETFS Physical i.e., ETFS Physical and Champion Iron go up and down completely randomly.
Pair Corralation between ETFS Physical and Champion Iron
Assuming the 90 days trading horizon ETFS Physical Gold is expected to under-perform the Champion Iron. But the etf apears to be less risky and, when comparing its historical volatility, ETFS Physical Gold is 1.99 times less risky than Champion Iron. The etf trades about -0.12 of its potential returns per unit of risk. The Champion Iron is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 576.00 in Champion Iron on September 1, 2024 and sell it today you would lose (3.00) from holding Champion Iron or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ETFS Physical Gold vs. Champion Iron
Performance |
| Timeline |
| ETFS Physical Gold |
| Champion Iron |
ETFS Physical and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Physical and Champion Iron
The main advantage of trading using opposite ETFS Physical and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Physical position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| ETFS Physical vs. Champion Iron | ETFS Physical vs. Australian Dairy Farms | ETFS Physical vs. Perpetual Credit Income | ETFS Physical vs. Greentech Metals |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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