Correlation Between Hawsons Iron and Paladin Energy
Can any of the company-specific risk be diversified away by investing in both Hawsons Iron and Paladin Energy 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 Paladin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hawsons Iron and Paladin Energy, you can compare the effects of market volatilities on Hawsons Iron and Paladin Energy 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 Paladin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hawsons Iron and Paladin Energy.
Diversification Opportunities for Hawsons Iron and Paladin Energy
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hawsons and Paladin is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hawsons Iron and Paladin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paladin Energy 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 Paladin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paladin Energy has no effect on the direction of Hawsons Iron i.e., Hawsons Iron and Paladin Energy go up and down completely randomly.
Pair Corralation between Hawsons Iron and Paladin Energy
Assuming the 90 days trading horizon Hawsons Iron is expected to under-perform the Paladin Energy. In addition to that, Hawsons Iron is 1.32 times more volatile than Paladin Energy. It trades about -0.04 of its total potential returns per unit of risk. Paladin Energy is currently generating about 0.02 per unit of volatility. If you would invest 700.00 in Paladin Energy on September 2, 2024 and sell it today you would earn a total of 60.00 from holding Paladin Energy or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hawsons Iron vs. Paladin Energy
Performance |
| Timeline |
| Hawsons Iron |
| Paladin Energy |
Hawsons Iron and Paladin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hawsons Iron and Paladin Energy
The main advantage of trading using opposite Hawsons Iron and Paladin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hawsons Iron position performs unexpectedly, Paladin Energy 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 Paladin Energy will offset losses from the drop in Paladin Energy's long position.| Hawsons Iron vs. Northern Star Resources | Hawsons Iron vs. Evolution Mining | Hawsons Iron vs. Bluescope Steel | Hawsons Iron vs. Sandfire Resources NL |
| Paladin Energy vs. Westpac Banking | Paladin Energy vs. ABACUS STORAGE KING | Paladin Energy vs. Odyssey Energy | Paladin Energy vs. Imricor Medical Systems |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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