Correlation Between Iron Road and Truscott Mining
Can any of the company-specific risk be diversified away by investing in both Iron Road and Truscott 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 Truscott 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 Truscott Mining Corp, you can compare the effects of market volatilities on Iron Road and Truscott 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 Truscott Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iron Road and Truscott Mining.
Diversification Opportunities for Iron Road and Truscott Mining
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Iron and Truscott is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road and Truscott Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truscott Mining Corp 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 Truscott Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truscott Mining Corp has no effect on the direction of Iron Road i.e., Iron Road and Truscott Mining go up and down completely randomly.
Pair Corralation between Iron Road and Truscott Mining
Assuming the 90 days trading horizon Iron Road is expected to under-perform the Truscott Mining. But the stock apears to be less risky and, when comparing its historical volatility, Iron Road is 1.17 times less risky than Truscott Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Truscott Mining Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.10 in Truscott Mining Corp on August 30, 2024 and sell it today you would earn a total of 3.60 from holding Truscott Mining Corp or generate 87.8% 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. Truscott Mining Corp
Performance |
| Timeline |
| Iron Road |
| Truscott Mining Corp |
Iron Road and Truscott Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iron Road and Truscott Mining
The main advantage of trading using opposite Iron Road and Truscott Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road position performs unexpectedly, Truscott 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 Truscott Mining will offset losses from the drop in Truscott Mining'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 |
| Truscott Mining vs. Northern Star Resources | Truscott Mining vs. Evolution Mining | Truscott Mining vs. Bluescope Steel | Truscott Mining vs. Sandfire Resources NL |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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