Correlation Between South32 and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both South32 and Labrador Iron 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 South32 and Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South32 Limited and Labrador Iron Ore, you can compare the effects of market volatilities on South32 and Labrador Iron 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 South32 with a short position of Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of South32 and Labrador Iron.
Diversification Opportunities for South32 and Labrador Iron
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between South32 and Labrador is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding South32 Limited and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and South32 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 South32 Limited are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of South32 i.e., South32 and Labrador Iron go up and down completely randomly.
Pair Corralation between South32 and Labrador Iron
Assuming the 90 days horizon South32 Limited is expected to generate 2.47 times more return on investment than Labrador Iron. However, South32 is 2.47 times more volatile than Labrador Iron Ore. It trades about 0.03 of its potential returns per unit of risk. Labrador Iron Ore is currently generating about -0.01 per unit of risk. If you would invest 211.00 in South32 Limited on September 3, 2024 and sell it today you would earn a total of 16.00 from holding South32 Limited or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.35% |
| Values | Daily Returns |
South32 Limited vs. Labrador Iron Ore
Performance |
| Timeline |
| South32 Limited |
| Labrador Iron Ore |
South32 and Labrador Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South32 and Labrador Iron
The main advantage of trading using opposite South32 and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South32 position performs unexpectedly, Labrador Iron 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.| South32 vs. IGO Limited | South32 vs. Anglo American PLC | South32 vs. TNG Limited | South32 vs. Amarc Resources |
| Labrador Iron vs. Olympic Steel | Labrador Iron vs. Universal Stainless Alloy | Labrador Iron vs. Outokumpu Oyj ADR | Labrador Iron vs. Usinas Siderurgicas de |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |