Correlation Between Labrador Iron and HONEYWELL CDR
Can any of the company-specific risk be diversified away by investing in both Labrador Iron and HONEYWELL CDR 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 HONEYWELL CDR 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 HONEYWELL CDR, you can compare the effects of market volatilities on Labrador Iron and HONEYWELL CDR 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 HONEYWELL CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Labrador Iron and HONEYWELL CDR.
Diversification Opportunities for Labrador Iron and HONEYWELL CDR
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Labrador and HONEYWELL is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Labrador Iron Ore and HONEYWELL CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL CDR 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 HONEYWELL CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL CDR has no effect on the direction of Labrador Iron i.e., Labrador Iron and HONEYWELL CDR go up and down completely randomly.
Pair Corralation between Labrador Iron and HONEYWELL CDR
Assuming the 90 days trading horizon Labrador Iron Ore is expected to generate 0.65 times more return on investment than HONEYWELL CDR. However, Labrador Iron Ore is 1.53 times less risky than HONEYWELL CDR. It trades about 0.22 of its potential returns per unit of risk. HONEYWELL CDR is currently generating about -0.03 per unit of risk. If you would invest 2,926 in Labrador Iron Ore on November 4, 2024 and sell it today you would earn a total of 125.00 from holding Labrador Iron Ore or generate 4.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Labrador Iron Ore vs. HONEYWELL CDR
Performance |
| Timeline |
| Labrador Iron Ore |
| HONEYWELL CDR |
Labrador Iron and HONEYWELL CDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Labrador Iron and HONEYWELL CDR
The main advantage of trading using opposite Labrador Iron and HONEYWELL CDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Labrador Iron position performs unexpectedly, HONEYWELL CDR 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 HONEYWELL CDR will offset losses from the drop in HONEYWELL CDR's long position.| Labrador Iron vs. IAMGold | Labrador Iron vs. Eldorado Gold Corp | Labrador Iron vs. Alamos Gold | Labrador Iron vs. NovaGold Resources |
| HONEYWELL CDR vs. Fairfax Financial Holdings | HONEYWELL CDR vs. Fairfax Financial Holdings | HONEYWELL CDR vs. Fairfax Financial Holdings | HONEYWELL CDR vs. Fairfax Financial Holdings |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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