Correlation Between Rio Tinto and Sayona Mining
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Sayona Mining 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 Sayona Mining 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 Sayona Mining Limited, you can compare the effects of market volatilities on Rio Tinto and Sayona Mining 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 Sayona Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Sayona Mining.
Diversification Opportunities for Rio Tinto and Sayona Mining
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rio and Sayona is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto ADR and Sayona Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sayona Mining Limited 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 Sayona Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sayona Mining Limited has no effect on the direction of Rio Tinto i.e., Rio Tinto and Sayona Mining go up and down completely randomly.
Pair Corralation between Rio Tinto and Sayona Mining
Considering the 90-day investment horizon Rio Tinto ADR is expected to generate 0.16 times more return on investment than Sayona Mining. However, Rio Tinto ADR is 6.24 times less risky than Sayona Mining. It trades about 0.16 of its potential returns per unit of risk. Sayona Mining Limited is currently generating about -0.11 per unit of risk. If you would invest 5,877 in Rio Tinto ADR on November 2, 2024 and sell it today you would earn a total of 214.00 from holding Rio Tinto ADR or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rio Tinto ADR vs. Sayona Mining Limited
Performance |
| Timeline |
| Rio Tinto ADR |
| Sayona Mining Limited |
Rio Tinto and Sayona Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Sayona Mining
The main advantage of trading using opposite Rio Tinto and Sayona Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Sayona Mining 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 Sayona Mining will offset losses from the drop in Sayona Mining's long position.| Rio Tinto vs. Vale SA ADR | Rio Tinto vs. Teck Resources Ltd | Rio Tinto vs. MP Materials Corp | Rio Tinto vs. Lithium Americas Corp |
| Sayona Mining vs. Hannan Metals | Sayona Mining vs. Atco Mining | Sayona Mining vs. Leading Edge Materials | Sayona Mining vs. Arianne Phosphate |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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