Correlation Between Roebuck Food and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Roebuck Food and Caledonia Mining 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 Roebuck Food and Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Roebuck Food Group and Caledonia Mining, you can compare the effects of market volatilities on Roebuck Food and Caledonia Mining 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 Roebuck Food with a short position of Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roebuck Food and Caledonia Mining.
Diversification Opportunities for Roebuck Food and Caledonia Mining
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Roebuck and Caledonia is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Roebuck Food Group and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining and Roebuck Food 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 Roebuck Food Group are associated (or correlated) with Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Roebuck Food i.e., Roebuck Food and Caledonia Mining go up and down completely randomly.
Pair Corralation between Roebuck Food and Caledonia Mining
Assuming the 90 days trading horizon Roebuck Food Group is expected to generate 0.9 times more return on investment than Caledonia Mining. However, Roebuck Food Group is 1.12 times less risky than Caledonia Mining. It trades about 0.05 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.02 per unit of risk. If you would invest 1,200 in Roebuck Food Group on October 15, 2024 and sell it today you would earn a total of 550.00 from holding Roebuck Food Group or generate 45.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Roebuck Food Group vs. Caledonia Mining
Performance |
| Timeline |
| Roebuck Food Group |
| Caledonia Mining |
Roebuck Food and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Roebuck Food and Caledonia Mining
The main advantage of trading using opposite Roebuck Food and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roebuck Food position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Roebuck Food vs. Sovereign Metals | Roebuck Food vs. Cornish Metals | Roebuck Food vs. International Biotechnology Trust | Roebuck Food vs. Power Metal Resources |
| Caledonia Mining vs. Blackrock World Mining | Caledonia Mining vs. International Consolidated Airlines | Caledonia Mining vs. Jacquet Metal Service | Caledonia Mining vs. Empire Metals Limited |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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