Correlation Between Rio Tinto and Pampa Metals
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Pampa Metals 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 Pampa Metals 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 Pampa Metals, you can compare the effects of market volatilities on Rio Tinto and Pampa Metals 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 Pampa Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Pampa Metals.
Diversification Opportunities for Rio Tinto and Pampa Metals
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rio and Pampa is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto ADR and Pampa Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pampa Metals 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 Pampa Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pampa Metals has no effect on the direction of Rio Tinto i.e., Rio Tinto and Pampa Metals go up and down completely randomly.
Pair Corralation between Rio Tinto and Pampa Metals
Considering the 90-day investment horizon Rio Tinto ADR is expected to under-perform the Pampa Metals. But the stock apears to be less risky and, when comparing its historical volatility, Rio Tinto ADR is 2.53 times less risky than Pampa Metals. The stock trades about -0.13 of its potential returns per unit of risk. The Pampa Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Pampa Metals on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Pampa Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rio Tinto ADR vs. Pampa Metals
Performance |
| Timeline |
| Rio Tinto ADR |
| Pampa Metals |
Rio Tinto and Pampa Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Pampa Metals
The main advantage of trading using opposite Rio Tinto and Pampa Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Pampa Metals 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 Pampa Metals will offset losses from the drop in Pampa Metals' 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 |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |