Correlation Between Superior Resources and Mount Gibson
Can any of the company-specific risk be diversified away by investing in both Superior Resources and Mount Gibson 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 Superior Resources and Mount Gibson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Resources and Mount Gibson Iron, you can compare the effects of market volatilities on Superior Resources and Mount Gibson 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 Superior Resources with a short position of Mount Gibson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Resources and Mount Gibson.
Diversification Opportunities for Superior Resources and Mount Gibson
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Superior and Mount is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Superior Resources and Mount Gibson Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mount Gibson Iron and Superior 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 Superior Resources are associated (or correlated) with Mount Gibson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mount Gibson Iron has no effect on the direction of Superior Resources i.e., Superior Resources and Mount Gibson go up and down completely randomly.
Pair Corralation between Superior Resources and Mount Gibson
Assuming the 90 days trading horizon Superior Resources is expected to generate 3.18 times more return on investment than Mount Gibson. However, Superior Resources is 3.18 times more volatile than Mount Gibson Iron. It trades about 0.0 of its potential returns per unit of risk. Mount Gibson Iron is currently generating about -0.06 per unit of risk. If you would invest 2.40 in Superior Resources on September 1, 2024 and sell it today you would lose (1.60) from holding Superior Resources or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Superior Resources vs. Mount Gibson Iron
Performance |
| Timeline |
| Superior Resources |
| Mount Gibson Iron |
Superior Resources and Mount Gibson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Resources and Mount Gibson
The main advantage of trading using opposite Superior Resources and Mount Gibson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Resources position performs unexpectedly, Mount Gibson 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 Mount Gibson will offset losses from the drop in Mount Gibson's long position.| Superior Resources vs. Northern Star Resources | Superior Resources vs. Evolution Mining | Superior Resources vs. Bluescope Steel | Superior Resources vs. Sandfire Resources NL |
| Mount Gibson vs. Northern Star Resources | Mount Gibson vs. Evolution Mining | Mount Gibson vs. Bluescope Steel | Mount Gibson 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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