Correlation Between Rio Tinto and Boliden AB
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Boliden AB 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 Boliden AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto ADR and Boliden AB ADR, you can compare the effects of market volatilities on Rio Tinto and Boliden AB 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 Boliden AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Boliden AB.
Diversification Opportunities for Rio Tinto and Boliden AB
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Rio and Boliden is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto ADR and Boliden AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boliden AB ADR 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 ADR are associated (or correlated) with Boliden AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boliden AB ADR has no effect on the direction of Rio Tinto i.e., Rio Tinto and Boliden AB go up and down completely randomly.
Pair Corralation between Rio Tinto and Boliden AB
Considering the 90-day investment horizon Rio Tinto ADR is expected to under-perform the Boliden AB. But the stock apears to be less risky and, when comparing its historical volatility, Rio Tinto ADR is 1.55 times less risky than Boliden AB. The stock trades about -0.21 of its potential returns per unit of risk. The Boliden AB ADR is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 6,779 in Boliden AB ADR on August 28, 2024 and sell it today you would lose (825.00) from holding Boliden AB ADR or give up 12.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto ADR vs. Boliden AB ADR
Performance |
| Timeline |
| Rio Tinto ADR |
| Boliden AB ADR |
Rio Tinto and Boliden AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Boliden AB
The main advantage of trading using opposite Rio Tinto and Boliden AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Boliden AB 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 Boliden AB will offset losses from the drop in Boliden AB's long position.| Rio Tinto vs. Vale SA ADR | Rio Tinto vs. BHP Group Limited | Rio Tinto vs. Glencore PLC ADR | Rio Tinto vs. Piedmont Lithium Ltd |
| Boliden AB vs. Sumitomo Metal Mining | Boliden AB vs. Anglo American PLC | Boliden AB vs. Glencore PLC | Boliden AB vs. Snow Lake Resources |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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