Correlation Between Stelar Metals and Coles
Can any of the company-specific risk be diversified away by investing in both Stelar Metals and Coles 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 Stelar Metals and Coles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stelar Metals and Coles Group, you can compare the effects of market volatilities on Stelar Metals and Coles 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 Stelar Metals with a short position of Coles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and Coles.
Diversification Opportunities for Stelar Metals and Coles
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stelar and Coles is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Stelar Metals and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and Stelar 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 Stelar Metals are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of Stelar Metals i.e., Stelar Metals and Coles go up and down completely randomly.
Pair Corralation between Stelar Metals and Coles
Assuming the 90 days trading horizon Stelar Metals is expected to under-perform the Coles. In addition to that, Stelar Metals is 3.99 times more volatile than Coles Group. It trades about -0.11 of its total potential returns per unit of risk. Coles Group is currently generating about 0.13 per unit of volatility. If you would invest 1,804 in Coles Group on October 26, 2024 and sell it today you would earn a total of 110.00 from holding Coles Group or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stelar Metals vs. Coles Group
Performance |
| Timeline |
| Stelar Metals |
| Coles Group |
Stelar Metals and Coles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and Coles
The main advantage of trading using opposite Stelar Metals and Coles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar Metals position performs unexpectedly, Coles 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 Coles will offset losses from the drop in Coles' long position.| Stelar Metals vs. Northern Star Resources | Stelar Metals vs. Evolution Mining | Stelar Metals vs. Bluescope Steel | Stelar Metals vs. De Grey Mining |
| Coles vs. Centuria Industrial Reit | Coles vs. Nufarm Finance NZ | Coles vs. Kip McGrath Education | Coles vs. Centaurus 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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