Correlation Between Indiana Resources and Australian United
Can any of the company-specific risk be diversified away by investing in both Indiana Resources and Australian United 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 Indiana Resources and Australian United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indiana Resources and Australian United Investment, you can compare the effects of market volatilities on Indiana Resources and Australian United 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 Indiana Resources with a short position of Australian United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indiana Resources and Australian United.
Diversification Opportunities for Indiana Resources and Australian United
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indiana and Australian is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Indiana Resources and Australian United Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian United and Indiana Resources 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 Indiana Resources are associated (or correlated) with Australian United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian United has no effect on the direction of Indiana Resources i.e., Indiana Resources and Australian United go up and down completely randomly.
Pair Corralation between Indiana Resources and Australian United
Assuming the 90 days trading horizon Indiana Resources is expected to generate 1.27 times more return on investment than Australian United. However, Indiana Resources is 1.27 times more volatile than Australian United Investment. It trades about 0.26 of its potential returns per unit of risk. Australian United Investment is currently generating about 0.1 per unit of risk. If you would invest 6.10 in Indiana Resources on October 24, 2024 and sell it today you would earn a total of 0.40 from holding Indiana Resources or generate 6.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Indiana Resources vs. Australian United Investment
Performance |
| Timeline |
| Indiana Resources |
| Australian United |
Indiana Resources and Australian United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indiana Resources and Australian United
The main advantage of trading using opposite Indiana Resources and Australian United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indiana Resources position performs unexpectedly, Australian United 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 Australian United will offset losses from the drop in Australian United's long position.| Indiana Resources vs. DY6 Metals | Indiana Resources vs. Data3 | Indiana Resources vs. M3 Mining | Indiana Resources vs. Aeon Metals |
| Australian United vs. Vulcan Steel | Australian United vs. Pearl Gull Iron | Australian United vs. Red Hill Iron | Australian United vs. Health and Plant |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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