Correlation Between Iron Road and Chalice Mining
Can any of the company-specific risk be diversified away by investing in both Iron Road and Chalice Mining 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 Chalice Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iron Road and Chalice Mining Limited, you can compare the effects of market volatilities on Iron Road and Chalice Mining 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 Chalice Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Chalice Mining.
Diversification Opportunities for Iron Road and Chalice Mining
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iron and Chalice is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Chalice Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Mining 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 Chalice Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Mining has no effect on the direction of Iron Road i.e., Iron Road and Chalice Mining go up and down completely randomly.
Pair Corralation between Iron Road and Chalice Mining
Assuming the 90 days trading horizon Iron Road is expected to generate 0.85 times more return on investment than Chalice Mining. However, Iron Road is 1.17 times less risky than Chalice Mining. It trades about -0.02 of its potential returns per unit of risk. Chalice Mining Limited is currently generating about -0.04 per unit of risk. If you would invest 13.00 in Iron Road on September 3, 2024 and sell it today you would lose (6.80) from holding Iron Road or give up 52.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iron Road vs. Chalice Mining Limited
Performance |
| Timeline |
| Iron Road |
| Chalice Mining |
Iron Road and Chalice Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and Chalice Mining
The main advantage of trading using opposite Iron Road and Chalice Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Chalice Mining 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 Chalice Mining will offset losses from the drop in Chalice Mining's long position.| Iron Road vs. Northern Star Resources | Iron Road vs. Evolution Mining | Iron Road vs. Bluescope Steel | Iron Road vs. Aneka Tambang Tbk |
| Chalice Mining vs. Northern Star Resources | Chalice Mining vs. Evolution Mining | Chalice Mining vs. Bluescope Steel | Chalice Mining vs. Aneka Tambang Tbk |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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