Correlation Between Metro Mining and Home Consortium
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Home Consortium 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 Home Consortium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Home Consortium, you can compare the effects of market volatilities on Metro Mining and Home Consortium 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 Home Consortium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Home Consortium.
Diversification Opportunities for Metro Mining and Home Consortium
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metro and Home is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Home Consortium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Consortium 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 Home Consortium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Consortium has no effect on the direction of Metro Mining i.e., Metro Mining and Home Consortium go up and down completely randomly.
Pair Corralation between Metro Mining and Home Consortium
Assuming the 90 days trading horizon Metro Mining is expected to generate 0.57 times more return on investment than Home Consortium. However, Metro Mining is 1.77 times less risky than Home Consortium. It trades about -0.14 of its potential returns per unit of risk. Home Consortium is currently generating about -0.2 per unit of risk. If you would invest 6.00 in Metro Mining on October 12, 2024 and sell it today you would lose (0.40) from holding Metro Mining or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Mining vs. Home Consortium
Performance |
| Timeline |
| Metro Mining |
| Home Consortium |
Metro Mining and Home Consortium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Home Consortium
The main advantage of trading using opposite Metro Mining and Home Consortium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Home Consortium 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 Home Consortium will offset losses from the drop in Home Consortium's long position.| Metro Mining vs. Seven West Media | Metro Mining vs. Star Entertainment Group | Metro Mining vs. Super Retail Group | Metro Mining vs. Microequities Asset Management |
| Home Consortium vs. Metro Mining | Home Consortium vs. Event Hospitality and | Home Consortium vs. Mayfield Childcare | Home Consortium vs. MetalsGrove 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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