Correlation Between Legacy Iron and Inventis
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Inventis 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 Inventis 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 Inventis, you can compare the effects of market volatilities on Legacy Iron and Inventis 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 Inventis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Inventis.
Diversification Opportunities for Legacy Iron and Inventis
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Legacy and Inventis is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Inventis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventis 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 Inventis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventis has no effect on the direction of Legacy Iron i.e., Legacy Iron and Inventis go up and down completely randomly.
Pair Corralation between Legacy Iron and Inventis
Assuming the 90 days trading horizon Legacy Iron Ore is expected to generate 3.63 times more return on investment than Inventis. However, Legacy Iron is 3.63 times more volatile than Inventis. It trades about -0.02 of its potential returns per unit of risk. Inventis is currently generating about -0.08 per unit of risk. If you would invest 1.40 in Legacy Iron Ore on August 31, 2024 and sell it today you would lose (0.30) from holding Legacy Iron Ore or give up 21.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legacy Iron Ore vs. Inventis
Performance |
| Timeline |
| Legacy Iron Ore |
| Inventis |
Legacy Iron and Inventis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Inventis
The main advantage of trading using opposite Legacy Iron and Inventis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Inventis 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 Inventis will offset losses from the drop in Inventis' long position.| Legacy Iron vs. Red Hill Iron | Legacy Iron vs. Argo Investments | Legacy Iron vs. Bluescope Steel | Legacy Iron vs. Tombador Iron |
| Inventis vs. Truscott Mining Corp | Inventis vs. Clime Investment Management | Inventis vs. Premier Investments | Inventis vs. Sandon Capital Investments |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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