Correlation Between Iluka Resources and Grid Metals
Can any of the company-specific risk be diversified away by investing in both Iluka Resources and Grid Metals 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 Iluka Resources and Grid Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources Ltd and Grid Metals Corp, you can compare the effects of market volatilities on Iluka Resources and Grid Metals 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 Iluka Resources with a short position of Grid Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Grid Metals.
Diversification Opportunities for Iluka Resources and Grid Metals
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Iluka and Grid is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources Ltd and Grid Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grid Metals Corp and Iluka 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 Iluka Resources Ltd are associated (or correlated) with Grid Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grid Metals Corp has no effect on the direction of Iluka Resources i.e., Iluka Resources and Grid Metals go up and down completely randomly.
Pair Corralation between Iluka Resources and Grid Metals
Assuming the 90 days horizon Iluka Resources Ltd is expected to generate 0.51 times more return on investment than Grid Metals. However, Iluka Resources Ltd is 1.97 times less risky than Grid Metals. It trades about -0.02 of its potential returns per unit of risk. Grid Metals Corp is currently generating about -0.05 per unit of risk. If you would invest 2,263 in Iluka Resources Ltd on September 2, 2024 and sell it today you would lose (502.00) from holding Iluka Resources Ltd or give up 22.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.75% |
| Values | Daily Returns |
Iluka Resources Ltd vs. Grid Metals Corp
Performance |
| Timeline |
| Iluka Resources |
| Grid Metals Corp |
Iluka Resources and Grid Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and Grid Metals
The main advantage of trading using opposite Iluka Resources and Grid Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources position performs unexpectedly, Grid Metals 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 Grid Metals will offset losses from the drop in Grid Metals' long position.| Iluka Resources vs. ERAMET SA | Iluka Resources vs. Giyani Metals Corp | Iluka Resources vs. IGO Limited | Iluka Resources vs. Grid Metals Corp |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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