Correlation Between M3 Mining and Champion Iron
Can any of the company-specific risk be diversified away by investing in both M3 Mining and Champion Iron 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 M3 Mining and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and Champion Iron, you can compare the effects of market volatilities on M3 Mining and Champion Iron 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 M3 Mining with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and Champion Iron.
Diversification Opportunities for M3 Mining and Champion Iron
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between M3M and Champion is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and M3 Mining 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 M3 Mining are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of M3 Mining i.e., M3 Mining and Champion Iron go up and down completely randomly.
Pair Corralation between M3 Mining and Champion Iron
Assuming the 90 days trading horizon M3 Mining is expected to generate 2.22 times more return on investment than Champion Iron. However, M3 Mining is 2.22 times more volatile than Champion Iron. It trades about 0.14 of its potential returns per unit of risk. Champion Iron is currently generating about -0.11 per unit of risk. If you would invest 3.80 in M3 Mining on November 3, 2024 and sell it today you would earn a total of 0.50 from holding M3 Mining or generate 13.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
M3 Mining vs. Champion Iron
Performance |
| Timeline |
| M3 Mining |
| Champion Iron |
M3 Mining and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and Champion Iron
The main advantage of trading using opposite M3 Mining and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| M3 Mining vs. Stelar Metals | M3 Mining vs. FireFly Metals | M3 Mining vs. Sports Entertainment Group | M3 Mining vs. Sky Metals |
| Champion Iron vs. Auswide Bank | Champion Iron vs. Step One Clothing | Champion Iron vs. Qbe Insurance Group | Champion Iron vs. Liberty Financial Group |
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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