Correlation Between Iron Road and BSP Financial
Can any of the company-specific risk be diversified away by investing in both Iron Road and BSP Financial 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 Iron Road and BSP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road and BSP Financial Group, you can compare the effects of market volatilities on Iron Road and BSP Financial 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 Iron Road with a short position of BSP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and BSP Financial.
Diversification Opportunities for Iron Road and BSP Financial
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iron and BSP is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and BSP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BSP Financial Group and Iron Road 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 Iron Road are associated (or correlated) with BSP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BSP Financial Group has no effect on the direction of Iron Road i.e., Iron Road and BSP Financial go up and down completely randomly.
Pair Corralation between Iron Road and BSP Financial
Assuming the 90 days trading horizon Iron Road is expected to under-perform the BSP Financial. In addition to that, Iron Road is 1.13 times more volatile than BSP Financial Group. It trades about -0.06 of its total potential returns per unit of risk. BSP Financial Group is currently generating about 0.12 per unit of volatility. If you would invest 620.00 in BSP Financial Group on September 13, 2024 and sell it today you would earn a total of 29.00 from holding BSP Financial Group or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Road vs. BSP Financial Group
Performance |
| Timeline |
| Iron Road |
| BSP Financial Group |
Iron Road and BSP Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and BSP Financial
The main advantage of trading using opposite Iron Road and BSP Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, BSP Financial 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 BSP Financial will offset losses from the drop in BSP Financial's long position.| Iron Road vs. Northern Star Resources | Iron Road vs. Evolution Mining | Iron Road vs. Bluescope Steel | Iron Road vs. Sandfire Resources NL |
| BSP Financial vs. Aneka Tambang Tbk | BSP Financial vs. Commonwealth Bank of | BSP Financial vs. Australia and New | BSP Financial vs. ANZ Group Holdings |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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