Correlation Between Mineral Res and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both Mineral Res and Fortescue Metals 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 Mineral Res and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mineral Res and Fortescue Metals Group, you can compare the effects of market volatilities on Mineral Res and Fortescue Metals 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 Mineral Res with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mineral Res and Fortescue Metals.
Diversification Opportunities for Mineral Res and Fortescue Metals
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mineral and Fortescue is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mineral Res and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and Mineral Res 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 Mineral Res are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Mineral Res i.e., Mineral Res and Fortescue Metals go up and down completely randomly.
Pair Corralation between Mineral Res and Fortescue Metals
Assuming the 90 days horizon Mineral Res is expected to under-perform the Fortescue Metals. In addition to that, Mineral Res is 2.47 times more volatile than Fortescue Metals Group. It trades about -0.15 of its total potential returns per unit of risk. Fortescue Metals Group is currently generating about -0.04 per unit of volatility. If you would invest 2,696 in Fortescue Metals Group on September 13, 2024 and sell it today you would lose (117.00) from holding Fortescue Metals Group or give up 4.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mineral Res vs. Fortescue Metals Group
Performance |
| Timeline |
| Mineral Res |
| Fortescue Metals |
Mineral Res and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mineral Res and Fortescue Metals
The main advantage of trading using opposite Mineral Res and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mineral Res position performs unexpectedly, Fortescue Metals 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| Mineral Res vs. IGO Limited | Mineral Res vs. Grid Metals Corp | Mineral Res vs. First American Silver | Mineral Res vs. Qubec Nickel Corp |
| Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Qubec Nickel Corp | Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Hannan Metals |
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 Stocks Directory module to find actively traded stocks across global markets.
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