Correlation Between M3 Mining and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both M3 Mining and Insignia Financial 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 Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M3 Mining and Insignia Financial, you can compare the effects of market volatilities on M3 Mining and Insignia Financial 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 Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of M3 Mining and Insignia Financial.
Diversification Opportunities for M3 Mining and Insignia Financial
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between M3M and Insignia is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding M3 Mining and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial 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 Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of M3 Mining i.e., M3 Mining and Insignia Financial go up and down completely randomly.
Pair Corralation between M3 Mining and Insignia Financial
Assuming the 90 days trading horizon M3 Mining is expected to generate 2.57 times more return on investment than Insignia Financial. However, M3 Mining is 2.57 times more volatile than Insignia Financial. It trades about -0.03 of its potential returns per unit of risk. Insignia Financial is currently generating about -0.13 per unit of risk. If you would invest 3.70 in M3 Mining on September 1, 2024 and sell it today you would lose (0.20) from holding M3 Mining or give up 5.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M3 Mining vs. Insignia Financial
Performance |
| Timeline |
| M3 Mining |
| Insignia Financial |
M3 Mining and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M3 Mining and Insignia Financial
The main advantage of trading using opposite M3 Mining and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M3 Mining position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| M3 Mining vs. IDP Education | M3 Mining vs. Sky Metals | M3 Mining vs. G8 Education | M3 Mining vs. RLF AgTech |
| Insignia Financial vs. Retail Food Group | Insignia Financial vs. Clime Investment Management | Insignia Financial vs. Diversified United Investment | Insignia Financial vs. Duxton Broadacre Farms |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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