Correlation Between Metro Mining and SPASX Dividend
Can any of the company-specific risk be diversified away by investing in both Metro Mining and SPASX Dividend 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 Metro Mining and SPASX Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and SPASX Dividend Opportunities, you can compare the effects of market volatilities on Metro Mining and SPASX Dividend 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 Metro Mining with a short position of SPASX Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and SPASX Dividend.
Diversification Opportunities for Metro Mining and SPASX Dividend
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and SPASX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and SPASX Dividend Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPASX Dividend Oppor and Metro 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 Metro Mining are associated (or correlated) with SPASX Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPASX Dividend Oppor has no effect on the direction of Metro Mining i.e., Metro Mining and SPASX Dividend go up and down completely randomly.
Pair Corralation between Metro Mining and SPASX Dividend
Assuming the 90 days trading horizon Metro Mining is expected to generate 4.92 times more return on investment than SPASX Dividend. However, Metro Mining is 4.92 times more volatile than SPASX Dividend Opportunities. It trades about 0.3 of its potential returns per unit of risk. SPASX Dividend Opportunities is currently generating about 0.18 per unit of risk. If you would invest 5.20 in Metro Mining on September 2, 2024 and sell it today you would earn a total of 1.10 from holding Metro Mining or generate 21.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Mining vs. SPASX Dividend Opportunities
Performance |
| Timeline |
Metro Mining and SPASX Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Metro Mining
Pair trading matchups for Metro Mining
SPASX Dividend Opportunities
Pair trading matchups for SPASX Dividend
Pair Trading with Metro Mining and SPASX Dividend
The main advantage of trading using opposite Metro Mining and SPASX Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, SPASX Dividend 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 SPASX Dividend will offset losses from the drop in SPASX Dividend's long position.| Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Sandfire Resources NL |
| SPASX Dividend vs. Metro Mining | SPASX Dividend vs. Regal Funds Management | SPASX Dividend vs. Step One Clothing | SPASX Dividend vs. Talisman Mining |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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