Correlation Between Eskay Mining and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Eskay Mining and Rio Tinto 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 Eskay Mining and Rio Tinto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eskay Mining Corp and Rio Tinto Group, you can compare the effects of market volatilities on Eskay Mining and Rio Tinto 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 Eskay Mining with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eskay Mining and Rio Tinto.
Diversification Opportunities for Eskay Mining and Rio Tinto
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Eskay and Rio is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Eskay Mining Corp and Rio Tinto Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto Group and Eskay Mining 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 Eskay Mining Corp are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto Group has no effect on the direction of Eskay Mining i.e., Eskay Mining and Rio Tinto go up and down completely randomly.
Pair Corralation between Eskay Mining and Rio Tinto
Assuming the 90 days horizon Eskay Mining Corp is expected to generate 6.84 times more return on investment than Rio Tinto. However, Eskay Mining is 6.84 times more volatile than Rio Tinto Group. It trades about 0.13 of its potential returns per unit of risk. Rio Tinto Group is currently generating about -0.06 per unit of risk. If you would invest 9.86 in Eskay Mining Corp on September 22, 2024 and sell it today you would earn a total of 2.14 from holding Eskay Mining Corp or generate 21.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eskay Mining Corp vs. Rio Tinto Group
Performance |
| Timeline |
| Eskay Mining Corp |
| Rio Tinto Group |
Eskay Mining and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eskay Mining and Rio Tinto
The main advantage of trading using opposite Eskay Mining and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eskay Mining position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Eskay Mining vs. Rio Tinto Group | Eskay Mining vs. Anglo American plc | Eskay Mining vs. Mineral Resources Limited | Eskay Mining vs. Liontown Resources Limited |
| Rio Tinto vs. American Lithium Corp | Rio Tinto vs. ADRIATIC METALS LS 013355 | Rio Tinto vs. Superior Plus Corp | Rio Tinto vs. SIVERS SEMICONDUCTORS AB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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