Correlation Between First Quantum and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both First Quantum and Sandfire 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 Sandfire 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 Sandfire Resources Limited, you can compare the effects of market volatilities on First Quantum and Sandfire 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Quantum and Sandfire Resources.
Diversification Opportunities for First Quantum and Sandfire Resources
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Sandfire is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of First Quantum i.e., First Quantum and Sandfire Resources go up and down completely randomly.
Pair Corralation between First Quantum and Sandfire Resources
Assuming the 90 days horizon First Quantum is expected to generate 1.18 times less return on investment than Sandfire Resources. In addition to that, First Quantum is 1.38 times more volatile than Sandfire Resources Limited. It trades about 0.08 of its total potential returns per unit of risk. Sandfire Resources Limited is currently generating about 0.13 per unit of volatility. If you would invest 615.00 in Sandfire Resources Limited on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Sandfire Resources Limited or generate 4.88% 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. Sandfire Resources Limited
Performance |
| Timeline |
| First Quantum Minerals |
| Sandfire Resources |
First Quantum and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Quantum and Sandfire Resources
The main advantage of trading using opposite First Quantum and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Quantum position performs unexpectedly, Sandfire 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| First Quantum vs. USWE SPORTS AB | First Quantum vs. TRAVEL LEISURE DL 01 | First Quantum vs. Corporate Office Properties | First Quantum vs. Columbia Sportswear |
| Sandfire Resources vs. Tsingtao Brewery | Sandfire Resources vs. Sixt Leasing SE | Sandfire Resources vs. LANDSEA HOMES P | Sandfire Resources vs. Lendlease Group |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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