Correlation Between Hawsons Iron and Coles
Can any of the company-specific risk be diversified away by investing in both Hawsons Iron and Coles 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 Hawsons Iron and Coles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawsons Iron and Coles Group, you can compare the effects of market volatilities on Hawsons Iron and Coles 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 Hawsons Iron with a short position of Coles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawsons Iron and Coles.
Diversification Opportunities for Hawsons Iron and Coles
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hawsons and Coles is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and Hawsons Iron 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 Hawsons Iron are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Coles go up and down completely randomly.
Pair Corralation between Hawsons Iron and Coles
Assuming the 90 days trading horizon Hawsons Iron is expected to under-perform the Coles. In addition to that, Hawsons Iron is 5.41 times more volatile than Coles Group. It trades about -0.04 of its total potential returns per unit of risk. Coles Group is currently generating about 0.05 per unit of volatility. If you would invest 1,545 in Coles Group on September 2, 2024 and sell it today you would earn a total of 314.00 from holding Coles Group or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawsons Iron vs. Coles Group
Performance |
| Timeline |
| Hawsons Iron |
| Coles Group |
Hawsons Iron and Coles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawsons Iron and Coles
The main advantage of trading using opposite Hawsons Iron and Coles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawsons Iron position performs unexpectedly, Coles 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 Coles will offset losses from the drop in Coles' long position.| Hawsons Iron vs. Northern Star Resources | Hawsons Iron vs. Evolution Mining | Hawsons Iron vs. Bluescope Steel | Hawsons Iron vs. Sandfire Resources NL |
| Coles vs. Australian Unity Office | Coles vs. Centuria Industrial Reit | Coles vs. Hawsons Iron | Coles vs. Centaurus 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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