Correlation Between Sky Metals and Iron Road
Can any of the company-specific risk be diversified away by investing in both Sky Metals and Iron Road 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 Sky Metals and Iron Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and Iron Road, you can compare the effects of market volatilities on Sky Metals and Iron Road 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 Sky Metals with a short position of Iron Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and Iron Road.
Diversification Opportunities for Sky Metals and Iron Road
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sky and Iron is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Iron Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iron Road and Sky Metals 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 Sky Metals are associated (or correlated) with Iron Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iron Road has no effect on the direction of Sky Metals i.e., Sky Metals and Iron Road go up and down completely randomly.
Pair Corralation between Sky Metals and Iron Road
Assuming the 90 days trading horizon Sky Metals is expected to generate 1.39 times more return on investment than Iron Road. However, Sky Metals is 1.39 times more volatile than Iron Road. It trades about 0.03 of its potential returns per unit of risk. Iron Road is currently generating about -0.02 per unit of risk. If you would invest 5.00 in Sky Metals on August 29, 2024 and sell it today you would earn a total of 0.30 from holding Sky Metals or generate 6.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.79% |
| Values | Daily Returns |
Sky Metals vs. Iron Road
Performance |
| Timeline |
| Sky Metals |
| Iron Road |
Sky Metals and Iron Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and Iron Road
The main advantage of trading using opposite Sky Metals and Iron Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, Iron Road 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 Iron Road will offset losses from the drop in Iron Road's long position.| Sky Metals vs. Northern Star Resources | Sky Metals vs. Evolution Mining | Sky Metals vs. Bluescope Steel | Sky Metals vs. Sandfire Resources NL |
| Iron Road vs. Kip McGrath Education | Iron Road vs. Metro Mining | Iron Road vs. Dexus Convenience Retail | Iron Road vs. Black Rock Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |