Correlation Between Legacy Iron and CogState
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and CogState 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 CogState 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 CogState, you can compare the effects of market volatilities on Legacy Iron and CogState 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 CogState. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and CogState.
Diversification Opportunities for Legacy Iron and CogState
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Legacy and CogState is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and CogState in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CogState 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 CogState. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CogState has no effect on the direction of Legacy Iron i.e., Legacy Iron and CogState go up and down completely randomly.
Pair Corralation between Legacy Iron and CogState
Assuming the 90 days trading horizon Legacy Iron Ore is expected to under-perform the CogState. In addition to that, Legacy Iron is 1.42 times more volatile than CogState. It trades about -0.04 of its total potential returns per unit of risk. CogState is currently generating about 0.0 per unit of volatility. If you would invest 140.00 in CogState on September 14, 2024 and sell it today you would lose (20.00) from holding CogState or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legacy Iron Ore vs. CogState
Performance |
| Timeline |
| Legacy Iron Ore |
| CogState |
Legacy Iron and CogState Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and CogState
The main advantage of trading using opposite Legacy Iron and CogState positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, CogState 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 CogState will offset losses from the drop in CogState's long position.| Legacy Iron vs. Aussie Broadband | Legacy Iron vs. Galena Mining | Legacy Iron vs. Capitol Health | Legacy Iron vs. Health and Plant |
| CogState vs. G8 Education | CogState vs. Step One Clothing | CogState vs. IDP Education | CogState vs. Ora Banda Mining |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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