Correlation Between Iluka Resources and Capricorn Metals
Can any of the company-specific risk be diversified away by investing in both Iluka Resources and Capricorn 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 Capricorn Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources and Capricorn Metals, you can compare the effects of market volatilities on Iluka Resources and Capricorn 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 Capricorn Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Capricorn Metals.
Diversification Opportunities for Iluka Resources and Capricorn Metals
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iluka and Capricorn is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and Capricorn Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Metals 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 are associated (or correlated) with Capricorn Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Metals has no effect on the direction of Iluka Resources i.e., Iluka Resources and Capricorn Metals go up and down completely randomly.
Pair Corralation between Iluka Resources and Capricorn Metals
Assuming the 90 days trading horizon Iluka Resources is expected to generate 0.93 times more return on investment than Capricorn Metals. However, Iluka Resources is 1.08 times less risky than Capricorn Metals. It trades about 0.31 of its potential returns per unit of risk. Capricorn Metals is currently generating about 0.22 per unit of risk. If you would invest 491.00 in Iluka Resources on October 20, 2024 and sell it today you would earn a total of 50.00 from holding Iluka Resources or generate 10.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iluka Resources vs. Capricorn Metals
Performance |
| Timeline |
| Iluka Resources |
| Capricorn Metals |
Iluka Resources and Capricorn Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and Capricorn Metals
The main advantage of trading using opposite Iluka Resources and Capricorn Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources position performs unexpectedly, Capricorn 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 Capricorn Metals will offset losses from the drop in Capricorn Metals' long position.| Iluka Resources vs. Healthco Healthcare and | Iluka Resources vs. Queste Communications | Iluka Resources vs. Ramsay Health Care | Iluka Resources vs. Vitura Health Limited |
| Capricorn Metals vs. Northern Star Resources | Capricorn Metals vs. Evolution Mining | Capricorn Metals vs. Bluescope Steel | Capricorn Metals vs. De Grey Mining |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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