Correlation Between Metro Mining and Regis Healthcare
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Regis Healthcare 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 Regis Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Regis Healthcare, you can compare the effects of market volatilities on Metro Mining and Regis Healthcare 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 Regis Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Regis Healthcare.
Diversification Opportunities for Metro Mining and Regis Healthcare
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and Regis is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Regis Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regis Healthcare 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 Regis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regis Healthcare has no effect on the direction of Metro Mining i.e., Metro Mining and Regis Healthcare go up and down completely randomly.
Pair Corralation between Metro Mining and Regis Healthcare
Assuming the 90 days trading horizon Metro Mining is expected to generate 2.3 times more return on investment than Regis Healthcare. However, Metro Mining is 2.3 times more volatile than Regis Healthcare. It trades about 0.1 of its potential returns per unit of risk. Regis Healthcare is currently generating about 0.17 per unit of risk. If you would invest 2.10 in Metro Mining on September 14, 2024 and sell it today you would earn a total of 3.60 from holding Metro Mining or generate 171.43% 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. Regis Healthcare
Performance |
| Timeline |
| Metro Mining |
| Regis Healthcare |
Metro Mining and Regis Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Regis Healthcare
The main advantage of trading using opposite Metro Mining and Regis Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Regis Healthcare 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 Regis Healthcare will offset losses from the drop in Regis Healthcare's long position.| Metro Mining vs. Super Retail Group | Metro Mining vs. Alternative Investment Trust | Metro Mining vs. Carlton Investments | Metro Mining vs. Diversified United Investment |
| Regis Healthcare vs. Energy Resources | Regis Healthcare vs. 88 Energy | Regis Healthcare vs. Amani Gold | Regis Healthcare vs. A1 Investments 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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