Correlation Between Legacy Iron and Resource Base
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Resource Base 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 Resource Base 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 Resource Base, you can compare the effects of market volatilities on Legacy Iron and Resource Base 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 Resource Base. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Resource Base.
Diversification Opportunities for Legacy Iron and Resource Base
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legacy and Resource is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base 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 Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of Legacy Iron i.e., Legacy Iron and Resource Base go up and down completely randomly.
Pair Corralation between Legacy Iron and Resource Base
Assuming the 90 days trading horizon Legacy Iron Ore is expected to under-perform the Resource Base. In addition to that, Legacy Iron is 1.74 times more volatile than Resource Base. It trades about -0.07 of its total potential returns per unit of risk. Resource Base is currently generating about -0.03 per unit of volatility. If you would invest 3.70 in Resource Base on October 10, 2024 and sell it today you would lose (0.10) from holding Resource Base or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legacy Iron Ore vs. Resource Base
Performance |
| Timeline |
| Legacy Iron Ore |
| Resource Base |
Legacy Iron and Resource Base Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Resource Base
The main advantage of trading using opposite Legacy Iron and Resource Base positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Resource Base 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 Resource Base will offset losses from the drop in Resource Base's long position.| Legacy Iron vs. MetalsGrove Mining | Legacy Iron vs. Black Rock Mining | Legacy Iron vs. Falcon Metals | Legacy Iron vs. Cleanaway Waste Management |
| Resource Base vs. Everest Metals | Resource Base vs. Aeon Metals | Resource Base vs. Aeris Environmental | Resource Base vs. Phoslock Environmental Technologies |
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 CEOs Directory module to screen CEOs from public companies around the world.
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