Correlation Between Iluka Resources and Step One
Can any of the company-specific risk be diversified away by investing in both Iluka Resources and Step One 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 Step One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources and Step One Clothing, you can compare the effects of market volatilities on Iluka Resources and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Step One.
Diversification Opportunities for Iluka Resources and Step One
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Iluka and Step is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Iluka Resources i.e., Iluka Resources and Step One go up and down completely randomly.
Pair Corralation between Iluka Resources and Step One
Assuming the 90 days trading horizon Iluka Resources is expected to under-perform the Step One. But the stock apears to be less risky and, when comparing its historical volatility, Iluka Resources is 1.05 times less risky than Step One. The stock trades about -0.19 of its potential returns per unit of risk. The Step One Clothing is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 177.00 in Step One Clothing on October 31, 2024 and sell it today you would lose (48.00) from holding Step One Clothing or give up 27.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iluka Resources vs. Step One Clothing
Performance |
| Timeline |
| Iluka Resources |
| Step One Clothing |
Iluka Resources and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and Step One
The main advantage of trading using opposite Iluka Resources and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Iluka Resources vs. Technology One | Iluka Resources vs. Stelar Metals | Iluka Resources vs. Dexus Convenience Retail | Iluka Resources vs. Meeka Metals Limited |
| Step One vs. BSP Financial Group | Step One vs. Bisalloy Steel Group | Step One vs. Qbe Insurance Group | Step One vs. Iron Road |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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