Correlation Between Hannan Metals and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both Hannan Metals and Fortescue Metals 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 Hannan Metals and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannan Metals and Fortescue Metals Group, you can compare the effects of market volatilities on Hannan Metals and Fortescue Metals 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 Hannan Metals with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannan Metals and Fortescue Metals.
Diversification Opportunities for Hannan Metals and Fortescue Metals
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hannan and Fortescue is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hannan Metals and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and Hannan 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 Hannan Metals are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Hannan Metals i.e., Hannan Metals and Fortescue Metals go up and down completely randomly.
Pair Corralation between Hannan Metals and Fortescue Metals
Assuming the 90 days horizon Hannan Metals is expected to generate 2.53 times more return on investment than Fortescue Metals. However, Hannan Metals is 2.53 times more volatile than Fortescue Metals Group. It trades about 0.14 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about -0.05 per unit of risk. If you would invest 13.00 in Hannan Metals on September 1, 2024 and sell it today you would earn a total of 30.00 from holding Hannan Metals or generate 230.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannan Metals vs. Fortescue Metals Group
Performance |
| Timeline |
| Hannan Metals |
| Fortescue Metals |
Hannan Metals and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannan Metals and Fortescue Metals
The main advantage of trading using opposite Hannan Metals and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannan Metals position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| Hannan Metals vs. Atco Mining | Hannan Metals vs. Leading Edge Materials | Hannan Metals vs. Arianne Phosphate | Hannan Metals vs. Global Battery Metals |
| Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Qubec Nickel Corp | Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Hannan Metals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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