Correlation Between Rio Tinto and TPG Telecom
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and TPG 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 TPG 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 TPG Telecom, you can compare the effects of market volatilities on Rio Tinto and TPG 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 TPG Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and TPG Telecom.
Diversification Opportunities for Rio Tinto and TPG Telecom
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Rio and TPG is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto and TPG Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG 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 TPG Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Telecom has no effect on the direction of Rio Tinto i.e., Rio Tinto and TPG Telecom go up and down completely randomly.
Pair Corralation between Rio Tinto and TPG Telecom
Assuming the 90 days trading horizon Rio Tinto is expected to generate 0.99 times more return on investment than TPG Telecom. However, Rio Tinto is 1.01 times less risky than TPG Telecom. It trades about -0.02 of its potential returns per unit of risk. TPG Telecom is currently generating about -0.06 per unit of risk. If you would invest 11,938 in Rio Tinto on November 6, 2024 and sell it today you would lose (198.00) from holding Rio Tinto or give up 1.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto vs. TPG Telecom
Performance |
| Timeline |
| Rio Tinto |
| TPG Telecom |
Rio Tinto and TPG Telecom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and TPG Telecom
The main advantage of trading using opposite Rio Tinto and TPG Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, TPG 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 TPG Telecom will offset losses from the drop in TPG Telecom's long position.| Rio Tinto vs. Autosports Group | Rio Tinto vs. Beston Global Food | Rio Tinto vs. Viva Leisure | Rio Tinto vs. Collins Foods |
| TPG Telecom vs. MetalsGrove Mining | TPG Telecom vs. 29Metals | TPG Telecom vs. Charter Hall Retail | TPG Telecom vs. Collins Foods |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stocks Directory Find actively traded stocks across global markets |