Correlation Between Iluka Resources and Cosmo Metals
Can any of the company-specific risk be diversified away by investing in both Iluka Resources and Cosmo 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 Cosmo 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 Cosmo Metals, you can compare the effects of market volatilities on Iluka Resources and Cosmo 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 Cosmo Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Cosmo Metals.
Diversification Opportunities for Iluka Resources and Cosmo Metals
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Iluka and Cosmo is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and Cosmo Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmo 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 Cosmo Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmo Metals has no effect on the direction of Iluka Resources i.e., Iluka Resources and Cosmo Metals go up and down completely randomly.
Pair Corralation between Iluka Resources and Cosmo Metals
Assuming the 90 days trading horizon Iluka Resources is expected to generate 0.84 times more return on investment than Cosmo Metals. However, Iluka Resources is 1.19 times less risky than Cosmo Metals. It trades about -0.25 of its potential returns per unit of risk. Cosmo Metals is currently generating about -0.39 per unit of risk. If you would invest 511.00 in Iluka Resources on November 4, 2024 and sell it today you would lose (69.00) from holding Iluka Resources or give up 13.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Iluka Resources vs. Cosmo Metals
Performance |
| Timeline |
| Iluka Resources |
| Cosmo Metals |
Iluka Resources and Cosmo Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and Cosmo Metals
The main advantage of trading using opposite Iluka Resources and Cosmo Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources position performs unexpectedly, Cosmo 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 Cosmo Metals will offset losses from the drop in Cosmo Metals' long position.| Iluka Resources vs. Ambertech | Iluka Resources vs. Aurelia Metals | Iluka Resources vs. Perseus Mining | Iluka Resources vs. Complii FinTech Solutions |
| Cosmo Metals vs. Nufarm Finance NZ | Cosmo Metals vs. Charter Hall Retail | Cosmo Metals vs. Dug Technology | Cosmo Metals vs. Retail Food Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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