Correlation Between Legacy Iron and Impedimed
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Impedimed 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 Impedimed 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 Impedimed, you can compare the effects of market volatilities on Legacy Iron and Impedimed 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 Impedimed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Impedimed.
Diversification Opportunities for Legacy Iron and Impedimed
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Legacy and Impedimed is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Impedimed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impedimed 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 Impedimed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impedimed has no effect on the direction of Legacy Iron i.e., Legacy Iron and Impedimed go up and down completely randomly.
Pair Corralation between Legacy Iron and Impedimed
Assuming the 90 days trading horizon Legacy Iron Ore is expected to under-perform the Impedimed. In addition to that, Legacy Iron is 2.15 times more volatile than Impedimed. It trades about -0.1 of its total potential returns per unit of risk. Impedimed is currently generating about -0.13 per unit of volatility. If you would invest 5.50 in Impedimed on September 1, 2024 and sell it today you would lose (0.40) from holding Impedimed or give up 7.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Legacy Iron Ore vs. Impedimed
Performance |
| Timeline |
| Legacy Iron Ore |
| Impedimed |
Legacy Iron and Impedimed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Impedimed
The main advantage of trading using opposite Legacy Iron and Impedimed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Impedimed 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 Impedimed will offset losses from the drop in Impedimed'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 |
| Impedimed vs. Hotel Property Investments | Impedimed vs. Hawsons Iron | Impedimed vs. Legacy Iron Ore | Impedimed vs. Retail Food Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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