Correlation Between Metro Mining and Sequoia Financial
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Sequoia Financial 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 Sequoia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Sequoia Financial Group, you can compare the effects of market volatilities on Metro Mining and Sequoia Financial 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 Sequoia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Sequoia Financial.
Diversification Opportunities for Metro Mining and Sequoia Financial
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metro and Sequoia is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Sequoia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia Financial 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 Sequoia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Financial has no effect on the direction of Metro Mining i.e., Metro Mining and Sequoia Financial go up and down completely randomly.
Pair Corralation between Metro Mining and Sequoia Financial
Assuming the 90 days trading horizon Metro Mining is expected to under-perform the Sequoia Financial. In addition to that, Metro Mining is 1.05 times more volatile than Sequoia Financial Group. It trades about -0.17 of its total potential returns per unit of risk. Sequoia Financial Group is currently generating about 0.2 per unit of volatility. If you would invest 36.00 in Sequoia Financial Group on October 11, 2024 and sell it today you would earn a total of 3.00 from holding Sequoia Financial Group or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Metro Mining vs. Sequoia Financial Group
Performance |
| Timeline |
| Metro Mining |
| Sequoia Financial |
Metro Mining and Sequoia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Sequoia Financial
The main advantage of trading using opposite Metro Mining and Sequoia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Sequoia Financial 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 Sequoia Financial will offset losses from the drop in Sequoia Financial'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 |
| Sequoia Financial vs. Cleanaway Waste Management | Sequoia Financial vs. Phoslock Environmental Technologies | Sequoia Financial vs. Lendlease Group | Sequoia Financial vs. Vulcan Steel |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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