Correlation Between Johnson Matthey and Antofagasta PLC
Can any of the company-specific risk be diversified away by investing in both Johnson Matthey and Antofagasta PLC 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 Johnson Matthey and Antofagasta PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Matthey PLC and Antofagasta PLC, you can compare the effects of market volatilities on Johnson Matthey and Antofagasta PLC 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 Johnson Matthey with a short position of Antofagasta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Matthey and Antofagasta PLC.
Diversification Opportunities for Johnson Matthey and Antofagasta PLC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Johnson and Antofagasta is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Matthey PLC and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC and Johnson Matthey 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 Johnson Matthey PLC are associated (or correlated) with Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Johnson Matthey i.e., Johnson Matthey and Antofagasta PLC go up and down completely randomly.
Pair Corralation between Johnson Matthey and Antofagasta PLC
Assuming the 90 days trading horizon Johnson Matthey PLC is expected to generate 0.82 times more return on investment than Antofagasta PLC. However, Johnson Matthey PLC is 1.23 times less risky than Antofagasta PLC. It trades about -0.15 of its potential returns per unit of risk. Antofagasta PLC is currently generating about -0.3 per unit of risk. If you would invest 140,800 in Johnson Matthey PLC on October 9, 2024 and sell it today you would lose (5,700) from holding Johnson Matthey PLC or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Matthey PLC vs. Antofagasta PLC
Performance |
| Timeline |
| Johnson Matthey PLC |
| Antofagasta PLC |
Johnson Matthey and Antofagasta PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Matthey and Antofagasta PLC
The main advantage of trading using opposite Johnson Matthey and Antofagasta PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Matthey position performs unexpectedly, Antofagasta PLC 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 Antofagasta PLC will offset losses from the drop in Antofagasta PLC's long position.| Johnson Matthey vs. Metals Exploration Plc | Johnson Matthey vs. United Internet AG | Johnson Matthey vs. Cornish Metals | Johnson Matthey vs. Aeorema Communications Plc |
| Antofagasta PLC vs. Roper Technologies | Antofagasta PLC vs. Finnair Oyj | Antofagasta PLC vs. Systemair AB | Antofagasta PLC vs. Alaska Air 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |