Correlation Between Legacy Iron and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Aurelia Metals 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 Legacy Iron and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legacy Iron Ore and Aurelia Metals, you can compare the effects of market volatilities on Legacy Iron and Aurelia Metals 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 Legacy Iron with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Aurelia Metals.
Diversification Opportunities for Legacy Iron and Aurelia Metals
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legacy and Aurelia is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and Legacy 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 Legacy Iron Ore are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of Legacy Iron i.e., Legacy Iron and Aurelia Metals go up and down completely randomly.
Pair Corralation between Legacy Iron and Aurelia Metals
Assuming the 90 days trading horizon Legacy Iron Ore is expected to under-perform the Aurelia Metals. In addition to that, Legacy Iron is 1.25 times more volatile than Aurelia Metals. It trades about -0.23 of its total potential returns per unit of risk. Aurelia Metals is currently generating about 0.07 per unit of volatility. If you would invest 18.00 in Aurelia Metals on September 12, 2024 and sell it today you would earn a total of 1.00 from holding Aurelia Metals or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legacy Iron Ore vs. Aurelia Metals
Performance |
| Timeline |
| Legacy Iron Ore |
| Aurelia Metals |
Legacy Iron and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Aurelia Metals
The main advantage of trading using opposite Legacy Iron and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Aurelia Metals 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| Legacy Iron vs. Northern Star Resources | Legacy Iron vs. Evolution Mining | Legacy Iron vs. Bluescope Steel | Legacy Iron vs. Sandfire Resources NL |
| Aurelia Metals vs. Legacy Iron Ore | Aurelia Metals vs. Mount Gibson Iron | Aurelia Metals vs. Retail Food Group | Aurelia Metals vs. Australian Agricultural |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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