Correlation Between Pilbara Minerals and Whitehaven Coal
Can any of the company-specific risk be diversified away by investing in both Pilbara Minerals and Whitehaven Coal 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 Pilbara Minerals and Whitehaven Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pilbara Minerals and Whitehaven Coal, you can compare the effects of market volatilities on Pilbara Minerals and Whitehaven Coal 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 Pilbara Minerals with a short position of Whitehaven Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pilbara Minerals and Whitehaven Coal.
Diversification Opportunities for Pilbara Minerals and Whitehaven Coal
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pilbara and Whitehaven is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Pilbara Minerals and Whitehaven Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whitehaven Coal and Pilbara Minerals 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 Pilbara Minerals are associated (or correlated) with Whitehaven Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whitehaven Coal has no effect on the direction of Pilbara Minerals i.e., Pilbara Minerals and Whitehaven Coal go up and down completely randomly.
Pair Corralation between Pilbara Minerals and Whitehaven Coal
Assuming the 90 days trading horizon Pilbara Minerals is expected to under-perform the Whitehaven Coal. In addition to that, Pilbara Minerals is 1.21 times more volatile than Whitehaven Coal. It trades about -0.2 of its total potential returns per unit of risk. Whitehaven Coal is currently generating about -0.11 per unit of volatility. If you would invest 625.00 in Whitehaven Coal on January 22, 2025 and sell it today you would lose (140.00) from holding Whitehaven Coal or give up 22.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pilbara Minerals vs. Whitehaven Coal
Performance |
| Timeline |
| Pilbara Minerals |
| Whitehaven Coal |
Pilbara Minerals and Whitehaven Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pilbara Minerals and Whitehaven Coal
The main advantage of trading using opposite Pilbara Minerals and Whitehaven Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pilbara Minerals position performs unexpectedly, Whitehaven Coal 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 Whitehaven Coal will offset losses from the drop in Whitehaven Coal's long position.| Pilbara Minerals vs. Northern Star Resources | Pilbara Minerals vs. Evolution Mining | Pilbara Minerals vs. Alcoa Inc | Pilbara Minerals vs. Bluescope Steel |
| Whitehaven Coal vs. Itech Minerals | Whitehaven Coal vs. Advanced Braking Technology | Whitehaven Coal vs. Aussie Broadband | Whitehaven Coal vs. K2 Asset Management |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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