Correlation Between Insignia Financial and Metro Mining
Can any of the company-specific risk be diversified away by investing in both Insignia Financial and Metro Mining 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 Insignia Financial and Metro Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insignia Financial and Metro Mining, you can compare the effects of market volatilities on Insignia Financial and Metro Mining 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 Insignia Financial with a short position of Metro Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insignia Financial and Metro Mining.
Diversification Opportunities for Insignia Financial and Metro Mining
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Insignia and Metro is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Insignia Financial and Metro Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Mining and Insignia Financial 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 Insignia Financial are associated (or correlated) with Metro Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Mining has no effect on the direction of Insignia Financial i.e., Insignia Financial and Metro Mining go up and down completely randomly.
Pair Corralation between Insignia Financial and Metro Mining
Assuming the 90 days trading horizon Insignia Financial is expected to under-perform the Metro Mining. But the stock apears to be less risky and, when comparing its historical volatility, Insignia Financial is 1.61 times less risky than Metro Mining. The stock trades about -0.16 of its potential returns per unit of risk. The Metro Mining is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5.30 in Metro Mining on August 28, 2024 and sell it today you would earn a total of 0.20 from holding Metro Mining or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insignia Financial vs. Metro Mining
Performance |
| Timeline |
| Insignia Financial |
| Metro Mining |
Insignia Financial and Metro Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insignia Financial and Metro Mining
The main advantage of trading using opposite Insignia Financial and Metro Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insignia Financial position performs unexpectedly, Metro Mining 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 Metro Mining will offset losses from the drop in Metro Mining's long position.| Insignia Financial vs. The Environmental Group | Insignia Financial vs. Legacy Iron Ore | Insignia Financial vs. Phoslock Environmental Technologies | Insignia Financial vs. Westpac Banking |
| Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Sandfire Resources NL |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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