Correlation Between Mesabi Trust and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Mesabi Trust and POSCO Holdings 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 Mesabi Trust and POSCO Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mesabi Trust and POSCO Holdings, you can compare the effects of market volatilities on Mesabi Trust and POSCO Holdings 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 Mesabi Trust with a short position of POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mesabi Trust and POSCO Holdings.
Diversification Opportunities for Mesabi Trust and POSCO Holdings
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mesabi and POSCO is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mesabi Trust and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings and Mesabi Trust 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 Mesabi Trust are associated (or correlated) with POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of Mesabi Trust i.e., Mesabi Trust and POSCO Holdings go up and down completely randomly.
Pair Corralation between Mesabi Trust and POSCO Holdings
Considering the 90-day investment horizon Mesabi Trust is expected to generate 1.24 times more return on investment than POSCO Holdings. However, Mesabi Trust is 1.24 times more volatile than POSCO Holdings. It trades about 0.07 of its potential returns per unit of risk. POSCO Holdings is currently generating about -0.1 per unit of risk. If you would invest 1,611 in Mesabi Trust on November 9, 2024 and sell it today you would earn a total of 890.00 from holding Mesabi Trust or generate 55.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mesabi Trust vs. POSCO Holdings
Performance |
| Timeline |
| Mesabi Trust |
| POSCO Holdings |
Mesabi Trust and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mesabi Trust and POSCO Holdings
The main advantage of trading using opposite Mesabi Trust and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mesabi Trust position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| Mesabi Trust vs. Olympic Steel | Mesabi Trust vs. POSCO Holdings | Mesabi Trust vs. Outokumpu Oyj ADR | Mesabi Trust vs. Usinas Siderurgicas de |
| POSCO Holdings vs. Olympic Steel | POSCO Holdings vs. Outokumpu Oyj ADR | POSCO Holdings vs. Ternium SA ADR | POSCO Holdings vs. Steel Dynamics |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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