Correlation Between Kumba Iron and Mesabi Trust
Can any of the company-specific risk be diversified away by investing in both Kumba Iron and Mesabi Trust 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 Kumba Iron and Mesabi Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumba Iron Ore and Mesabi Trust, you can compare the effects of market volatilities on Kumba Iron and Mesabi Trust 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 Kumba Iron with a short position of Mesabi Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumba Iron and Mesabi Trust.
Diversification Opportunities for Kumba Iron and Mesabi Trust
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kumba and Mesabi is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Kumba Iron Ore and Mesabi Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesabi Trust and Kumba Iron 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 Kumba Iron Ore are associated (or correlated) with Mesabi Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesabi Trust has no effect on the direction of Kumba Iron i.e., Kumba Iron and Mesabi Trust go up and down completely randomly.
Pair Corralation between Kumba Iron and Mesabi Trust
Assuming the 90 days horizon Kumba Iron Ore is expected to under-perform the Mesabi Trust. In addition to that, Kumba Iron is 1.44 times more volatile than Mesabi Trust. It trades about -0.01 of its total potential returns per unit of risk. Mesabi Trust is currently generating about 0.23 per unit of volatility. If you would invest 2,432 in Mesabi Trust on August 24, 2024 and sell it today you would earn a total of 222.00 from holding Mesabi Trust or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumba Iron Ore vs. Mesabi Trust
Performance |
| Timeline |
| Kumba Iron Ore |
| Mesabi Trust |
Kumba Iron and Mesabi Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumba Iron and Mesabi Trust
The main advantage of trading using opposite Kumba Iron and Mesabi Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumba Iron position performs unexpectedly, Mesabi Trust 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 Mesabi Trust will offset losses from the drop in Mesabi Trust's long position.| Kumba Iron vs. Olympic Steel | Kumba Iron vs. Mesabi Trust | Kumba Iron vs. Universal Stainless Alloy | Kumba Iron vs. POSCO Holdings |
| Mesabi Trust vs. Olympic Steel | Mesabi Trust vs. Universal Stainless Alloy | Mesabi Trust vs. POSCO Holdings | Mesabi Trust vs. Outokumpu Oyj ADR |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |