Correlation Between Largo Resources and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both Largo Resources and Fortescue Metals 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 Largo Resources and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Largo Resources and Fortescue Metals Group, you can compare the effects of market volatilities on Largo Resources and Fortescue Metals 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 Largo Resources with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Largo Resources and Fortescue Metals.
Diversification Opportunities for Largo Resources and Fortescue Metals
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Largo and Fortescue is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Largo Resources and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and Largo Resources 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 Largo Resources are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Largo Resources i.e., Largo Resources and Fortescue Metals go up and down completely randomly.
Pair Corralation between Largo Resources and Fortescue Metals
Considering the 90-day investment horizon Largo Resources is expected to under-perform the Fortescue Metals. In addition to that, Largo Resources is 2.14 times more volatile than Fortescue Metals Group. It trades about -0.01 of its total potential returns per unit of risk. Fortescue Metals Group is currently generating about 0.06 per unit of volatility. If you would invest 2,335 in Fortescue Metals Group on November 18, 2024 and sell it today you would earn a total of 140.00 from holding Fortescue Metals Group or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Largo Resources vs. Fortescue Metals Group
Performance |
| Timeline |
| Largo Resources |
| Fortescue Metals |
Largo Resources and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Largo Resources and Fortescue Metals
The main advantage of trading using opposite Largo Resources and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Largo Resources position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| Largo Resources vs. Skeena Resources | Largo Resources vs. Materion | Largo Resources vs. Compass Minerals International | Largo Resources vs. IperionX Limited American |
| Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Qubec Nickel Corp | Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Hannan Metals |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |