Correlation Between Herald Investment and Ferrexpo PLC
Can any of the company-specific risk be diversified away by investing in both Herald Investment and Ferrexpo PLC 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 Herald Investment and Ferrexpo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Ferrexpo PLC, you can compare the effects of market volatilities on Herald Investment and Ferrexpo PLC 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 Herald Investment with a short position of Ferrexpo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Ferrexpo PLC.
Diversification Opportunities for Herald Investment and Ferrexpo PLC
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Herald and Ferrexpo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Ferrexpo PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferrexpo PLC and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Ferrexpo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferrexpo PLC has no effect on the direction of Herald Investment i.e., Herald Investment and Ferrexpo PLC go up and down completely randomly.
Pair Corralation between Herald Investment and Ferrexpo PLC
Assuming the 90 days trading horizon Herald Investment is expected to generate 4.37 times less return on investment than Ferrexpo PLC. But when comparing it to its historical volatility, Herald Investment Trust is 7.45 times less risky than Ferrexpo PLC. It trades about 0.5 of its potential returns per unit of risk. Ferrexpo PLC is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 5,970 in Ferrexpo PLC on September 5, 2024 and sell it today you would earn a total of 3,810 from holding Ferrexpo PLC or generate 63.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. Ferrexpo PLC
Performance |
| Timeline |
| Herald Investment Trust |
| Ferrexpo PLC |
Herald Investment and Ferrexpo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Ferrexpo PLC
The main advantage of trading using opposite Herald Investment and Ferrexpo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Ferrexpo PLC 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 Ferrexpo PLC will offset losses from the drop in Ferrexpo PLC's long position.| Herald Investment vs. SupplyMe Capital PLC | Herald Investment vs. Lloyds Banking Group | Herald Investment vs. Premier African Minerals | Herald Investment vs. SANTANDER UK 8 |
| Ferrexpo PLC vs. Herald Investment Trust | Ferrexpo PLC vs. Lords Grp Trading | Ferrexpo PLC vs. Hansa Investment | Ferrexpo PLC vs. New Residential Investment |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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