Correlation Between First Quantum and Bannerman Resources
Can any of the company-specific risk be diversified away by investing in both First Quantum and Bannerman Resources 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 First Quantum and Bannerman Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Quantum Minerals and Bannerman Resources Limited, you can compare the effects of market volatilities on First Quantum and Bannerman Resources 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 First Quantum with a short position of Bannerman Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Quantum and Bannerman Resources.
Diversification Opportunities for First Quantum and Bannerman Resources
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Bannerman is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Bannerman Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bannerman Resources and First Quantum 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 First Quantum Minerals are associated (or correlated) with Bannerman Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bannerman Resources has no effect on the direction of First Quantum i.e., First Quantum and Bannerman Resources go up and down completely randomly.
Pair Corralation between First Quantum and Bannerman Resources
Assuming the 90 days horizon First Quantum Minerals is expected to generate 1.39 times more return on investment than Bannerman Resources. However, First Quantum is 1.39 times more volatile than Bannerman Resources Limited. It trades about 0.12 of its potential returns per unit of risk. Bannerman Resources Limited is currently generating about 0.0 per unit of risk. If you would invest 1,178 in First Quantum Minerals on September 4, 2024 and sell it today you would earn a total of 108.00 from holding First Quantum Minerals or generate 9.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Quantum Minerals vs. Bannerman Resources Limited
Performance |
| Timeline |
| First Quantum Minerals |
| Bannerman Resources |
First Quantum and Bannerman Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Quantum and Bannerman Resources
The main advantage of trading using opposite First Quantum and Bannerman Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Quantum position performs unexpectedly, Bannerman Resources 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 Bannerman Resources will offset losses from the drop in Bannerman Resources' long position.| First Quantum vs. SBI Insurance Group | First Quantum vs. Goosehead Insurance | First Quantum vs. Selective Insurance Group | First Quantum vs. Nucletron Electronic Aktiengesellschaft |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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