Correlation Between Manhattan and Diamond Fields
Can any of the company-specific risk be diversified away by investing in both Manhattan and Diamond Fields 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 Manhattan and Diamond Fields into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Manhattan Limited and Diamond Fields Resources, you can compare the effects of market volatilities on Manhattan and Diamond Fields 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 Manhattan with a short position of Diamond Fields. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manhattan and Diamond Fields.
Diversification Opportunities for Manhattan and Diamond Fields
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Manhattan and Diamond is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Manhattan Limited and Diamond Fields Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Fields Resources and Manhattan 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 Manhattan Limited are associated (or correlated) with Diamond Fields. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Fields Resources has no effect on the direction of Manhattan i.e., Manhattan and Diamond Fields go up and down completely randomly.
Pair Corralation between Manhattan and Diamond Fields
Assuming the 90 days horizon Manhattan Limited is expected to generate 1.38 times more return on investment than Diamond Fields. However, Manhattan is 1.38 times more volatile than Diamond Fields Resources. It trades about 0.15 of its potential returns per unit of risk. Diamond Fields Resources is currently generating about 0.03 per unit of risk. If you would invest 0.19 in Manhattan Limited on November 2, 2024 and sell it today you would earn a total of 0.58 from holding Manhattan Limited or generate 305.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 63.21% |
| Values | Daily Returns |
Manhattan Limited vs. Diamond Fields Resources
Performance |
| Timeline |
| Manhattan Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Diamond Fields Resources |
Manhattan and Diamond Fields Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Manhattan and Diamond Fields
The main advantage of trading using opposite Manhattan and Diamond Fields positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Manhattan position performs unexpectedly, Diamond Fields 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 Diamond Fields will offset losses from the drop in Diamond Fields' long position.| Manhattan vs. EnviroGold Global Limited | Manhattan vs. Gemfields Group Limited | Manhattan vs. Pacific Ridge Exploration | Manhattan vs. Star Royalties |
| Diamond Fields vs. Gemfields Group Limited | Diamond Fields vs. Star Royalties | Diamond Fields vs. Defiance Silver Corp | Diamond Fields vs. GoGold Resources |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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