Correlation Between Rio Tinto and Saint Jean
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Saint Jean 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 Saint Jean 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 Saint Jean Carbon, you can compare the effects of market volatilities on Rio Tinto and Saint Jean 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 Saint Jean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Saint Jean.
Diversification Opportunities for Rio Tinto and Saint Jean
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rio and Saint is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto ADR and Saint Jean Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saint Jean Carbon 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 Saint Jean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saint Jean Carbon has no effect on the direction of Rio Tinto i.e., Rio Tinto and Saint Jean go up and down completely randomly.
Pair Corralation between Rio Tinto and Saint Jean
Considering the 90-day investment horizon Rio Tinto ADR is expected to under-perform the Saint Jean. But the stock apears to be less risky and, when comparing its historical volatility, Rio Tinto ADR is 7.19 times less risky than Saint Jean. The stock trades about 0.0 of its potential returns per unit of risk. The Saint Jean Carbon is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Saint Jean Carbon on November 2, 2024 and sell it today you would lose (3.23) from holding Saint Jean Carbon or give up 64.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Rio Tinto ADR vs. Saint Jean Carbon
Performance |
| Timeline |
| Rio Tinto ADR |
| Saint Jean Carbon |
Rio Tinto and Saint Jean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rio Tinto and Saint Jean
The main advantage of trading using opposite Rio Tinto and Saint Jean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Saint Jean 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 Saint Jean will offset losses from the drop in Saint Jean'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 |
| Saint Jean vs. ZincX Resources Corp | Saint Jean vs. Mundoro Capital | Saint Jean vs. Strategic Resources | Saint Jean vs. Norra Metals Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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