Correlation Between Labrador Iron and Finning International
Can any of the company-specific risk be diversified away by investing in both Labrador Iron and Finning International 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 Labrador Iron and Finning International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Labrador Iron Ore and Finning International, you can compare the effects of market volatilities on Labrador Iron and Finning International 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 Labrador Iron with a short position of Finning International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and Finning International.
Diversification Opportunities for Labrador Iron and Finning International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Labrador and Finning is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and Finning International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finning International and Labrador 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 Labrador Iron Ore are associated (or correlated) with Finning International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finning International has no effect on the direction of Labrador Iron i.e., Labrador Iron and Finning International go up and down completely randomly.
Pair Corralation between Labrador Iron and Finning International
Assuming the 90 days trading horizon Labrador Iron Ore is expected to generate 0.56 times more return on investment than Finning International. However, Labrador Iron Ore is 1.79 times less risky than Finning International. It trades about -0.24 of its potential returns per unit of risk. Finning International is currently generating about -0.19 per unit of risk. If you would invest 3,129 in Labrador Iron Ore on August 29, 2024 and sell it today you would lose (215.00) from holding Labrador Iron Ore or give up 6.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Iron Ore vs. Finning International
Performance |
| Timeline |
| Labrador Iron Ore |
| Finning International |
Labrador Iron and Finning International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and Finning International
The main advantage of trading using opposite Labrador Iron and Finning International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron position performs unexpectedly, Finning International 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 Finning International will offset losses from the drop in Finning International's long position.| Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
| Finning International vs. Toromont Industries | Finning International vs. Ritchie Bros Auctioneers | Finning International vs. Stantec | Finning International vs. Transcontinental |
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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