Correlation Between Rio Tinto and Spirit Telecom
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Spirit Telecom 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 Spirit Telecom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto and Spirit Telecom, you can compare the effects of market volatilities on Rio Tinto and Spirit Telecom 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 Spirit Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Spirit Telecom.
Diversification Opportunities for Rio Tinto and Spirit Telecom
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Rio and Spirit is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto and Spirit Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirit Telecom 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 Spirit Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirit Telecom has no effect on the direction of Rio Tinto i.e., Rio Tinto and Spirit Telecom go up and down completely randomly.
Pair Corralation between Rio Tinto and Spirit Telecom
Assuming the 90 days trading horizon Rio Tinto is expected to generate 2.52 times less return on investment than Spirit Telecom. But when comparing it to its historical volatility, Rio Tinto is 3.51 times less risky than Spirit Telecom. It trades about 0.03 of its potential returns per unit of risk. Spirit Telecom is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Spirit Telecom on September 5, 2024 and sell it today you would lose (3.00) from holding Spirit Telecom or give up 4.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Rio Tinto vs. Spirit Telecom
Performance |
| Timeline |
| Rio Tinto |
| Spirit Telecom |
Rio Tinto and Spirit Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Spirit Telecom
The main advantage of trading using opposite Rio Tinto and Spirit Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Spirit Telecom 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 Spirit Telecom will offset losses from the drop in Spirit Telecom'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 |
| Spirit Telecom vs. Aneka Tambang Tbk | Spirit Telecom vs. BHP Group Limited | Spirit Telecom vs. Rio Tinto | Spirit Telecom vs. Macquarie Group Ltd |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |