Correlation Between Lynas Rare and Filo Mining
Can any of the company-specific risk be diversified away by investing in both Lynas Rare and Filo 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 Lynas Rare and Filo Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lynas Rare Earths and Filo Mining Corp, you can compare the effects of market volatilities on Lynas Rare and Filo 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 Lynas Rare with a short position of Filo Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lynas Rare and Filo Mining.
Diversification Opportunities for Lynas Rare and Filo Mining
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lynas and Filo is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Lynas Rare Earths and Filo Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Filo Mining Corp and Lynas Rare 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 Lynas Rare Earths are associated (or correlated) with Filo Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Filo Mining Corp has no effect on the direction of Lynas Rare i.e., Lynas Rare and Filo Mining go up and down completely randomly.
Pair Corralation between Lynas Rare and Filo Mining
Assuming the 90 days horizon Lynas Rare Earths is expected to under-perform the Filo Mining. In addition to that, Lynas Rare is 3.06 times more volatile than Filo Mining Corp. It trades about -0.1 of its total potential returns per unit of risk. Filo Mining Corp is currently generating about -0.09 per unit of volatility. If you would invest 2,219 in Filo Mining Corp on November 4, 2024 and sell it today you would lose (15.00) from holding Filo Mining Corp or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 55.0% |
| Values | Daily Returns |
Lynas Rare Earths vs. Filo Mining Corp
Performance |
| Timeline |
| Lynas Rare Earths |
| Filo Mining Corp |
Lynas Rare and Filo Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lynas Rare and Filo Mining
The main advantage of trading using opposite Lynas Rare and Filo Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lynas Rare position performs unexpectedly, Filo 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 Filo Mining will offset losses from the drop in Filo Mining's long position.| Lynas Rare vs. Aclara Resources | Lynas Rare vs. Anson Resources Limited | Lynas Rare vs. CDN Maverick Capital | Lynas Rare vs. Boliden AB ADR |
| Filo Mining vs. Lotus Resources Limited | Filo Mining vs. Golden Goliath Resources | Filo Mining vs. Stria Lithium | Filo Mining vs. Monitor Ventures |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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