Correlation Between Sandfire Resources and Magnetic Resources
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Magnetic Resources 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 Magnetic Resources 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 Magnetic Resources NL, you can compare the effects of market volatilities on Sandfire Resources and Magnetic Resources 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 Magnetic Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Magnetic Resources.
Diversification Opportunities for Sandfire Resources and Magnetic Resources
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sandfire and Magnetic is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Magnetic Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnetic Resources 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 Magnetic Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnetic Resources has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Magnetic Resources go up and down completely randomly.
Pair Corralation between Sandfire Resources and Magnetic Resources
Assuming the 90 days trading horizon Sandfire Resources NL is expected to under-perform the Magnetic Resources. But the stock apears to be less risky and, when comparing its historical volatility, Sandfire Resources NL is 3.3 times less risky than Magnetic Resources. The stock trades about -0.17 of its potential returns per unit of risk. The Magnetic Resources NL is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 126.00 in Magnetic Resources NL on August 27, 2024 and sell it today you would lose (1.00) from holding Magnetic Resources NL or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. Magnetic Resources NL
Performance |
| Timeline |
| Sandfire Resources |
| Magnetic Resources |
Sandfire Resources and Magnetic Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Magnetic Resources
The main advantage of trading using opposite Sandfire Resources and Magnetic Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Magnetic Resources 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 Magnetic Resources will offset losses from the drop in Magnetic Resources' long position.| Sandfire Resources vs. Northern Star Resources | Sandfire Resources vs. Evolution Mining | Sandfire Resources vs. Bluescope Steel | Sandfire Resources vs. Aneka Tambang Tbk |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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