Correlation Between Millbank Mining and Oceanic Iron
Can any of the company-specific risk be diversified away by investing in both Millbank Mining and Oceanic 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 Millbank Mining and Oceanic Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Millbank Mining Corp and Oceanic Iron Ore, you can compare the effects of market volatilities on Millbank Mining and Oceanic 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 Millbank Mining with a short position of Oceanic Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Millbank Mining and Oceanic Iron.
Diversification Opportunities for Millbank Mining and Oceanic Iron
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Millbank and Oceanic is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Millbank Mining Corp and Oceanic Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanic Iron Ore and Millbank 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 Millbank Mining Corp are associated (or correlated) with Oceanic Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanic Iron Ore has no effect on the direction of Millbank Mining i.e., Millbank Mining and Oceanic Iron go up and down completely randomly.
Pair Corralation between Millbank Mining and Oceanic Iron
Assuming the 90 days trading horizon Millbank Mining Corp is expected to generate 0.42 times more return on investment than Oceanic Iron. However, Millbank Mining Corp is 2.4 times less risky than Oceanic Iron. It trades about -0.07 of its potential returns per unit of risk. Oceanic Iron Ore is currently generating about -0.15 per unit of risk. If you would invest 50.00 in Millbank Mining Corp on September 22, 2024 and sell it today you would lose (3.00) from holding Millbank Mining Corp or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Millbank Mining Corp vs. Oceanic Iron Ore
Performance |
| Timeline |
| Millbank Mining Corp |
| Oceanic Iron Ore |
Millbank Mining and Oceanic Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Millbank Mining and Oceanic Iron
The main advantage of trading using opposite Millbank Mining and Oceanic Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Millbank Mining position performs unexpectedly, Oceanic 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 Oceanic Iron will offset losses from the drop in Oceanic Iron's long position.| Millbank Mining vs. National Bank of | Millbank Mining vs. Constellation Software | Millbank Mining vs. IGM Financial | Millbank Mining vs. US Financial 15 |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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