Correlation Between Metro Mining and Garda Diversified
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Garda Diversified 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 Garda Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Garda Diversified Ppty, you can compare the effects of market volatilities on Metro Mining and Garda Diversified 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 Garda Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Garda Diversified.
Diversification Opportunities for Metro Mining and Garda Diversified
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and Garda is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Garda Diversified Ppty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garda Diversified Ppty 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 Garda Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garda Diversified Ppty has no effect on the direction of Metro Mining i.e., Metro Mining and Garda Diversified go up and down completely randomly.
Pair Corralation between Metro Mining and Garda Diversified
Assuming the 90 days trading horizon Metro Mining is expected to generate 2.14 times more return on investment than Garda Diversified. However, Metro Mining is 2.14 times more volatile than Garda Diversified Ppty. It trades about 0.29 of its potential returns per unit of risk. Garda Diversified Ppty is currently generating about 0.07 per unit of risk. If you would invest 4.30 in Metro Mining on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Metro Mining or generate 46.51% 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. Garda Diversified Ppty
Performance |
| Timeline |
| Metro Mining |
| Garda Diversified Ppty |
Metro Mining and Garda Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Garda Diversified
The main advantage of trading using opposite Metro Mining and Garda Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Garda Diversified 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 Garda Diversified will offset losses from the drop in Garda Diversified's long position.| Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Aneka Tambang Tbk |
| Garda Diversified vs. Charter Hall Retail | Garda Diversified vs. GDI Property Group | Garda Diversified vs. Champion Iron | Garda Diversified vs. iShares Global Healthcare |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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