Correlation Between Metro Mining and Torque Metals
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Torque Metals 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 Torque Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Torque Metals, you can compare the effects of market volatilities on Metro Mining and Torque Metals 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 Torque Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Torque Metals.
Diversification Opportunities for Metro Mining and Torque Metals
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Metro and Torque is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Torque Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torque Metals 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 Torque Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torque Metals has no effect on the direction of Metro Mining i.e., Metro Mining and Torque Metals go up and down completely randomly.
Pair Corralation between Metro Mining and Torque Metals
Assuming the 90 days trading horizon Metro Mining is expected to generate 0.52 times more return on investment than Torque Metals. However, Metro Mining is 1.91 times less risky than Torque Metals. It trades about 0.08 of its potential returns per unit of risk. Torque Metals is currently generating about 0.02 per unit of risk. If you would invest 1.45 in Metro Mining on October 28, 2024 and sell it today you would earn a total of 4.35 from holding Metro Mining or generate 300.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Mining vs. Torque Metals
Performance |
| Timeline |
| Metro Mining |
| Torque Metals |
Metro Mining and Torque Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Mining and Torque Metals
The main advantage of trading using opposite Metro Mining and Torque Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Torque Metals 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 Torque Metals will offset losses from the drop in Torque Metals' long position.| Metro Mining vs. Mount Gibson Iron | Metro Mining vs. Iron Road | Metro Mining vs. Centaurus Metals | Metro Mining vs. Aeris Environmental |
| Torque Metals vs. Epsilon Healthcare | Torque Metals vs. Dexus Convenience Retail | Torque Metals vs. Healthco Healthcare and | Torque Metals vs. Gold Road 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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