Correlation Between SportsHero and OD6 Metals
Can any of the company-specific risk be diversified away by investing in both SportsHero and OD6 Metals 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 SportsHero and OD6 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SportsHero and OD6 Metals, you can compare the effects of market volatilities on SportsHero and OD6 Metals 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 SportsHero with a short position of OD6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of SportsHero and OD6 Metals.
Diversification Opportunities for SportsHero and OD6 Metals
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between SportsHero and OD6 is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SportsHero and OD6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OD6 Metals and SportsHero 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 SportsHero are associated (or correlated) with OD6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OD6 Metals has no effect on the direction of SportsHero i.e., SportsHero and OD6 Metals go up and down completely randomly.
Pair Corralation between SportsHero and OD6 Metals
Assuming the 90 days trading horizon SportsHero is expected to generate 1.26 times less return on investment than OD6 Metals. But when comparing it to its historical volatility, SportsHero is 3.66 times less risky than OD6 Metals. It trades about 0.25 of its potential returns per unit of risk. OD6 Metals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2.90 in OD6 Metals on August 29, 2024 and sell it today you would earn a total of 0.30 from holding OD6 Metals or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SportsHero vs. OD6 Metals
Performance |
| Timeline |
| SportsHero |
| OD6 Metals |
SportsHero and OD6 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SportsHero and OD6 Metals
The main advantage of trading using opposite SportsHero and OD6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SportsHero position performs unexpectedly, OD6 Metals 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 OD6 Metals will offset losses from the drop in OD6 Metals' long position.| SportsHero vs. PVW Resources | SportsHero vs. Woolworths | SportsHero vs. Wesfarmers | SportsHero vs. Coles Group |
| OD6 Metals vs. Northern Star Resources | OD6 Metals vs. Evolution Mining | OD6 Metals vs. Bluescope Steel | OD6 Metals 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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