Correlation Between Rio Tinto and AMP
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and AMP 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 Rio Tinto and AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto and AMP, you can compare the effects of market volatilities on Rio Tinto and AMP 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 Rio Tinto with a short position of AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and AMP.
Diversification Opportunities for Rio Tinto and AMP
Modest diversification
The 3 months correlation between Rio and AMP is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP and Rio Tinto 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 Rio Tinto are associated (or correlated) with AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Rio Tinto i.e., Rio Tinto and AMP go up and down completely randomly.
Pair Corralation between Rio Tinto and AMP
Assuming the 90 days trading horizon Rio Tinto is expected to generate 2.03 times less return on investment than AMP. But when comparing it to its historical volatility, Rio Tinto is 1.63 times less risky than AMP. It trades about 0.02 of its potential returns per unit of risk. AMP is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 125.00 in AMP on September 2, 2024 and sell it today you would earn a total of 31.00 from holding AMP or generate 24.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto vs. AMP
Performance |
| Timeline |
| Rio Tinto |
| AMP |
Rio Tinto and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and AMP
The main advantage of trading using opposite Rio Tinto and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| Rio Tinto vs. Super Retail Group | Rio Tinto vs. Ainsworth Game Technology | Rio Tinto vs. EROAD | Rio Tinto vs. Computershare |
| AMP vs. Wt Financial Group | AMP vs. Perpetual Credit Income | AMP vs. Bank of Queensland | AMP vs. Srj Technologies Group |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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