Correlation Between Legal General and Greenroc Mining
Can any of the company-specific risk be diversified away by investing in both Legal General and Greenroc Mining 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 Legal General and Greenroc Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legal General Group and Greenroc Mining PLC, you can compare the effects of market volatilities on Legal General and Greenroc Mining 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 Legal General with a short position of Greenroc Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legal General and Greenroc Mining.
Diversification Opportunities for Legal General and Greenroc Mining
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Legal and Greenroc is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Legal General Group and Greenroc Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenroc Mining PLC and Legal General 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 Legal General Group are associated (or correlated) with Greenroc Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenroc Mining PLC has no effect on the direction of Legal General i.e., Legal General and Greenroc Mining go up and down completely randomly.
Pair Corralation between Legal General and Greenroc Mining
Assuming the 90 days trading horizon Legal General Group is expected to under-perform the Greenroc Mining. But the stock apears to be less risky and, when comparing its historical volatility, Legal General Group is 5.49 times less risky than Greenroc Mining. The stock trades about -0.04 of its potential returns per unit of risk. The Greenroc Mining PLC is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 220.00 in Greenroc Mining PLC on September 3, 2024 and sell it today you would lose (60.00) from holding Greenroc Mining PLC or give up 27.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legal General Group vs. Greenroc Mining PLC
Performance |
| Timeline |
| Legal General Group |
| Greenroc Mining PLC |
Legal General and Greenroc Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legal General and Greenroc Mining
The main advantage of trading using opposite Legal General and Greenroc Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legal General position performs unexpectedly, Greenroc Mining 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 Greenroc Mining will offset losses from the drop in Greenroc Mining's long position.| Legal General vs. Greenroc Mining PLC | Legal General vs. GoldMining | Legal General vs. GlobalData PLC | Legal General vs. Blackrock World Mining |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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