Correlation Between Legacy Iron and Anson Resources
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Anson 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 Legacy Iron and Anson Resources 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 Anson Resources, you can compare the effects of market volatilities on Legacy Iron and Anson 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 Legacy Iron with a short position of Anson Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Anson Resources.
Diversification Opportunities for Legacy Iron and Anson Resources
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legacy and Anson is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Anson Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anson Resources 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 Anson Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anson Resources has no effect on the direction of Legacy Iron i.e., Legacy Iron and Anson Resources go up and down completely randomly.
Pair Corralation between Legacy Iron and Anson Resources
Assuming the 90 days trading horizon Legacy Iron Ore is expected to generate 0.9 times more return on investment than Anson Resources. However, Legacy Iron Ore is 1.11 times less risky than Anson Resources. It trades about 0.0 of its potential returns per unit of risk. Anson Resources is currently generating about -0.02 per unit of risk. If you would invest 1.80 in Legacy Iron Ore on September 4, 2024 and sell it today you would lose (0.70) from holding Legacy Iron Ore or give up 38.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Legacy Iron Ore vs. Anson Resources
Performance |
| Timeline |
| Legacy Iron Ore |
| Anson Resources |
Legacy Iron and Anson Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Anson Resources
The main advantage of trading using opposite Legacy Iron and Anson Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Anson 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 Anson Resources will offset losses from the drop in Anson Resources' long position.| Legacy Iron vs. Hotel Property Investments | Legacy Iron vs. Argo Investments | Legacy Iron vs. Sandon Capital Investments | Legacy Iron vs. Steamships Trading |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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