Correlation Between Sandfire Resources and Predictive Discovery
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and Predictive Discovery 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 Predictive Discovery 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 Predictive Discovery, you can compare the effects of market volatilities on Sandfire Resources and Predictive Discovery 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 Predictive Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Predictive Discovery.
Diversification Opportunities for Sandfire Resources and Predictive Discovery
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sandfire and Predictive is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and Predictive Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Predictive Discovery 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 Predictive Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Predictive Discovery has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and Predictive Discovery go up and down completely randomly.
Pair Corralation between Sandfire Resources and Predictive Discovery
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.33 times more return on investment than Predictive Discovery. However, Sandfire Resources NL is 3.03 times less risky than Predictive Discovery. It trades about -0.13 of its potential returns per unit of risk. Predictive Discovery is currently generating about -0.11 per unit of risk. If you would invest 1,067 in Sandfire Resources NL on August 26, 2024 and sell it today you would lose (40.00) from holding Sandfire Resources NL or give up 3.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. Predictive Discovery
Performance |
| Timeline |
| Sandfire Resources |
| Predictive Discovery |
Sandfire Resources and Predictive Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Predictive Discovery
The main advantage of trading using opposite Sandfire Resources and Predictive Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, Predictive Discovery 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 Predictive Discovery will offset losses from the drop in Predictive Discovery's long position.| Sandfire Resources vs. Hudson Investment Group | Sandfire Resources vs. Argo Investments | Sandfire Resources vs. Regal Investment | Sandfire Resources vs. Spirit Telecom |
| Predictive Discovery vs. Northern Star Resources | Predictive Discovery vs. Evolution Mining | Predictive Discovery vs. Bluescope Steel | Predictive Discovery 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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