Correlation Between Mount Gibson and Southern Cross
Can any of the company-specific risk be diversified away by investing in both Mount Gibson and Southern Cross 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 Mount Gibson and Southern Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Southern Cross Media, you can compare the effects of market volatilities on Mount Gibson and Southern Cross 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 Mount Gibson with a short position of Southern Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Southern Cross.
Diversification Opportunities for Mount Gibson and Southern Cross
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mount and Southern is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Southern Cross Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Cross Media and Mount Gibson 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 Mount Gibson Iron are associated (or correlated) with Southern Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Cross Media has no effect on the direction of Mount Gibson i.e., Mount Gibson and Southern Cross go up and down completely randomly.
Pair Corralation between Mount Gibson and Southern Cross
Assuming the 90 days trading horizon Mount Gibson Iron is expected to generate 0.74 times more return on investment than Southern Cross. However, Mount Gibson Iron is 1.36 times less risky than Southern Cross. It trades about 0.2 of its potential returns per unit of risk. Southern Cross Media is currently generating about -0.06 per unit of risk. If you would invest 30.00 in Mount Gibson Iron on October 24, 2024 and sell it today you would earn a total of 2.00 from holding Mount Gibson Iron or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mount Gibson Iron vs. Southern Cross Media
Performance |
| Timeline |
| Mount Gibson Iron |
| Southern Cross Media |
Mount Gibson and Southern Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mount Gibson and Southern Cross
The main advantage of trading using opposite Mount Gibson and Southern Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson position performs unexpectedly, Southern Cross 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 Southern Cross will offset losses from the drop in Southern Cross' long position.| Mount Gibson vs. Australian Unity Office | Mount Gibson vs. Nine Entertainment Co | Mount Gibson vs. The Environmental Group | Mount Gibson vs. ARN Media Limited |
| Southern Cross vs. Mount Gibson Iron | Southern Cross vs. Phoslock Environmental Technologies | Southern Cross vs. Bailador Technology Invest | Southern Cross vs. Queste Communications |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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