Correlation Between Sandfire Resources and Black Rock
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Black Rock 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 Sandfire Resources and Black Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandfire Resources NL and Black Rock Mining, you can compare the effects of market volatilities on Sandfire Resources and Black Rock 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 Sandfire Resources with a short position of Black Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Black Rock.
Diversification Opportunities for Sandfire Resources and Black Rock
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sandfire and Black is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Black Rock Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Rock Mining and Sandfire Resources 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 Sandfire Resources NL are associated (or correlated) with Black Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Rock Mining has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Black Rock go up and down completely randomly.
Pair Corralation between Sandfire Resources and Black Rock
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.72 times more return on investment than Black Rock. However, Sandfire Resources NL is 1.38 times less risky than Black Rock. It trades about 0.1 of its potential returns per unit of risk. Black Rock Mining is currently generating about -0.07 per unit of risk. If you would invest 907.00 in Sandfire Resources NL on August 25, 2024 and sell it today you would earn a total of 120.00 from holding Sandfire Resources NL or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. Black Rock Mining
Performance |
| Timeline |
| Sandfire Resources |
| Black Rock Mining |
Sandfire Resources and Black Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Black Rock
The main advantage of trading using opposite Sandfire Resources and Black Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Black Rock 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 Black Rock will offset losses from the drop in Black Rock's long position.| Sandfire Resources vs. Hudson Investment Group | Sandfire Resources vs. Argo Investments | Sandfire Resources vs. Regal Investment | Sandfire Resources vs. Spirit Telecom |
| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Sandfire Resources NL |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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