Correlation Between Legacy Iron and Mad Paws
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Mad Paws 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 Mad Paws 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 Mad Paws Holdings, you can compare the effects of market volatilities on Legacy Iron and Mad Paws 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 Mad Paws. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Mad Paws.
Diversification Opportunities for Legacy Iron and Mad Paws
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legacy and Mad is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Mad Paws Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mad Paws Holdings 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 Mad Paws. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mad Paws Holdings has no effect on the direction of Legacy Iron i.e., Legacy Iron and Mad Paws go up and down completely randomly.
Pair Corralation between Legacy Iron and Mad Paws
Assuming the 90 days trading horizon Legacy Iron Ore is expected to generate 1.08 times more return on investment than Mad Paws. However, Legacy Iron is 1.08 times more volatile than Mad Paws Holdings. It trades about -0.01 of its potential returns per unit of risk. Mad Paws Holdings is currently generating about -0.01 per unit of risk. If you would invest 1.70 in Legacy Iron Ore on September 14, 2024 and sell it today you would lose (0.90) from holding Legacy Iron Ore or give up 52.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.39% |
| Values | Daily Returns |
Legacy Iron Ore vs. Mad Paws Holdings
Performance |
| Timeline |
| Legacy Iron Ore |
| Mad Paws Holdings |
Legacy Iron and Mad Paws Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Mad Paws
The main advantage of trading using opposite Legacy Iron and Mad Paws positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Mad Paws 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 Mad Paws will offset losses from the drop in Mad Paws' long position.| Legacy Iron vs. Aussie Broadband | Legacy Iron vs. Galena Mining | Legacy Iron vs. Capitol Health | Legacy Iron vs. Health and Plant |
| Mad Paws vs. Genetic Technologies | Mad Paws vs. Legacy Iron Ore | Mad Paws vs. Srj Technologies Group | Mad Paws vs. Aeris Environmental |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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