Correlation Between Rio Tinto and Black Cat
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Black Cat 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 Black Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto and Black Cat Syndicate, you can compare the effects of market volatilities on Rio Tinto and Black Cat 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 Black Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Black Cat.
Diversification Opportunities for Rio Tinto and Black Cat
Very weak diversification
The 3 months correlation between Rio and Black is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto and Black Cat Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Cat Syndicate 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 Black Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Cat Syndicate has no effect on the direction of Rio Tinto i.e., Rio Tinto and Black Cat go up and down completely randomly.
Pair Corralation between Rio Tinto and Black Cat
Assuming the 90 days trading horizon Rio Tinto is expected to under-perform the Black Cat. But the stock apears to be less risky and, when comparing its historical volatility, Rio Tinto is 3.43 times less risky than Black Cat. The stock trades about -0.07 of its potential returns per unit of risk. The Black Cat Syndicate is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Black Cat Syndicate on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Black Cat Syndicate or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto vs. Black Cat Syndicate
Performance |
| Timeline |
| Rio Tinto |
| Black Cat Syndicate |
Rio Tinto and Black Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Black Cat
The main advantage of trading using opposite Rio Tinto and Black Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Black Cat 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 Black Cat will offset losses from the drop in Black Cat's long position.| Rio Tinto vs. Northern Star Resources | Rio Tinto vs. Evolution Mining | Rio Tinto vs. Bluescope Steel | Rio Tinto vs. Sandfire Resources NL |
| Black Cat vs. Flagship Investments | Black Cat vs. Treasury Wine Estates | Black Cat vs. Hotel Property Investments | Black Cat vs. Platinum Asia Investments |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |