Correlation Between Nexa Resources and Fortescue Metals
Can any of the company-specific risk be diversified away by investing in both Nexa Resources and Fortescue 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 Nexa Resources and Fortescue Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexa Resources SA and Fortescue Metals Group, you can compare the effects of market volatilities on Nexa Resources and Fortescue 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 Nexa Resources with a short position of Fortescue Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexa Resources and Fortescue Metals.
Diversification Opportunities for Nexa Resources and Fortescue Metals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexa and Fortescue is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Nexa Resources SA and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and Nexa Resources 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 Nexa Resources SA are associated (or correlated) with Fortescue Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Nexa Resources i.e., Nexa Resources and Fortescue Metals go up and down completely randomly.
Pair Corralation between Nexa Resources and Fortescue Metals
Given the investment horizon of 90 days Nexa Resources SA is expected to generate 0.89 times more return on investment than Fortescue Metals. However, Nexa Resources SA is 1.12 times less risky than Fortescue Metals. It trades about 0.06 of its potential returns per unit of risk. Fortescue Metals Group is currently generating about 0.01 per unit of risk. If you would invest 579.00 in Nexa Resources SA on August 29, 2024 and sell it today you would earn a total of 195.00 from holding Nexa Resources SA or generate 33.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexa Resources SA vs. Fortescue Metals Group
Performance |
| Timeline |
| Nexa Resources SA |
| Fortescue Metals |
Nexa Resources and Fortescue Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexa Resources and Fortescue Metals
The main advantage of trading using opposite Nexa Resources and Fortescue Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexa Resources position performs unexpectedly, Fortescue 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 Fortescue Metals will offset losses from the drop in Fortescue Metals' long position.| Nexa Resources vs. Materion | Nexa Resources vs. Fury Gold Mines | Nexa Resources vs. Eskay Mining Corp | Nexa Resources vs. EMX Royalty Corp |
| Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Qubec Nickel Corp | Fortescue Metals vs. IGO Limited | Fortescue Metals vs. Hannan Metals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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