Correlation Between Legacy Iron and De Grey
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and De Grey 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 De Grey 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 De Grey Mining, you can compare the effects of market volatilities on Legacy Iron and De Grey 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 De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and De Grey.
Diversification Opportunities for Legacy Iron and De Grey
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legacy and DEG is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining 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 De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Legacy Iron i.e., Legacy Iron and De Grey go up and down completely randomly.
Pair Corralation between Legacy Iron and De Grey
Assuming the 90 days trading horizon Legacy Iron Ore is expected to under-perform the De Grey. In addition to that, Legacy Iron is 1.7 times more volatile than De Grey Mining. It trades about -0.21 of its total potential returns per unit of risk. De Grey Mining is currently generating about 0.05 per unit of volatility. If you would invest 145.00 in De Grey Mining on August 28, 2024 and sell it today you would earn a total of 3.00 from holding De Grey Mining or generate 2.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legacy Iron Ore vs. De Grey Mining
Performance |
| Timeline |
| Legacy Iron Ore |
| De Grey Mining |
Legacy Iron and De Grey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and De Grey
The main advantage of trading using opposite Legacy Iron and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.| Legacy Iron vs. Northern Star Resources | Legacy Iron vs. Evolution Mining | Legacy Iron vs. Bluescope Steel | Legacy Iron vs. Sandfire Resources NL |
| De Grey vs. Aurelia Metals | De Grey vs. Austco Healthcare | De Grey vs. Health and Plant | De Grey vs. Alto Metals |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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