Correlation Between MRG Metals and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both MRG Metals and Australian Agricultural 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 MRG Metals and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRG Metals and Australian Agricultural, you can compare the effects of market volatilities on MRG Metals and Australian Agricultural 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 MRG Metals with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRG Metals and Australian Agricultural.
Diversification Opportunities for MRG Metals and Australian Agricultural
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between MRG and Australian is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding MRG Metals and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and MRG Metals 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 MRG Metals are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of MRG Metals i.e., MRG Metals and Australian Agricultural go up and down completely randomly.
Pair Corralation between MRG Metals and Australian Agricultural
Assuming the 90 days trading horizon MRG Metals is expected to under-perform the Australian Agricultural. In addition to that, MRG Metals is 8.65 times more volatile than Australian Agricultural. It trades about -0.1 of its total potential returns per unit of risk. Australian Agricultural is currently generating about -0.06 per unit of volatility. If you would invest 139.00 in Australian Agricultural on September 3, 2024 and sell it today you would lose (2.00) from holding Australian Agricultural or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MRG Metals vs. Australian Agricultural
Performance |
| Timeline |
| MRG Metals |
| Australian Agricultural |
MRG Metals and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRG Metals and Australian Agricultural
The main advantage of trading using opposite MRG Metals and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRG Metals position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| MRG Metals vs. Northern Star Resources | MRG Metals vs. Evolution Mining | MRG Metals vs. Bluescope Steel | MRG Metals vs. Aneka Tambang Tbk |
| Australian Agricultural vs. Cooper Metals | Australian Agricultural vs. OD6 Metals | Australian Agricultural vs. SportsHero | Australian Agricultural vs. Champion Iron |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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