Correlation Between Sandfire Resources and MetalsGrove Mining
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and MetalsGrove 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 Sandfire Resources and MetalsGrove Mining 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 MetalsGrove Mining, you can compare the effects of market volatilities on Sandfire Resources and MetalsGrove 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 Sandfire Resources with a short position of MetalsGrove Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and MetalsGrove Mining.
Diversification Opportunities for Sandfire Resources and MetalsGrove Mining
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sandfire and MetalsGrove is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and MetalsGrove Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetalsGrove 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 MetalsGrove Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetalsGrove Mining has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and MetalsGrove Mining go up and down completely randomly.
Pair Corralation between Sandfire Resources and MetalsGrove Mining
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.37 times more return on investment than MetalsGrove Mining. However, Sandfire Resources NL is 2.67 times less risky than MetalsGrove Mining. It trades about 0.11 of its potential returns per unit of risk. MetalsGrove Mining is currently generating about 0.04 per unit of risk. If you would invest 1,029 in Sandfire Resources NL on September 12, 2024 and sell it today you would earn a total of 38.00 from holding Sandfire Resources NL or generate 3.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. MetalsGrove Mining
Performance |
| Timeline |
| Sandfire Resources |
| MetalsGrove Mining |
Sandfire Resources and MetalsGrove Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and MetalsGrove Mining
The main advantage of trading using opposite Sandfire Resources and MetalsGrove Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, MetalsGrove 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 MetalsGrove Mining will offset losses from the drop in MetalsGrove Mining's long position.| Sandfire Resources vs. ABACUS STORAGE KING | Sandfire Resources vs. MetalsGrove Mining | Sandfire Resources vs. Qbe Insurance Group | Sandfire Resources vs. Alto Metals |
| MetalsGrove Mining vs. Mount Gibson Iron | MetalsGrove Mining vs. Ras Technology Holdings | MetalsGrove Mining vs. Advanced Braking Technology | MetalsGrove Mining vs. Green Technology Metals |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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