Correlation Between Sun Silver and Legacy Iron
Can any of the company-specific risk be diversified away by investing in both Sun Silver and Legacy 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 Sun Silver and Legacy Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Silver Limited and Legacy Iron Ore, you can compare the effects of market volatilities on Sun Silver and Legacy 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 Sun Silver with a short position of Legacy Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Silver and Legacy Iron.
Diversification Opportunities for Sun Silver and Legacy Iron
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Legacy is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sun Silver Limited and Legacy Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legacy Iron Ore and Sun Silver 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 Sun Silver Limited are associated (or correlated) with Legacy Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legacy Iron Ore has no effect on the direction of Sun Silver i.e., Sun Silver and Legacy Iron go up and down completely randomly.
Pair Corralation between Sun Silver and Legacy Iron
Assuming the 90 days trading horizon Sun Silver Limited is expected to generate 1.57 times more return on investment than Legacy Iron. However, Sun Silver is 1.57 times more volatile than Legacy Iron Ore. It trades about 0.14 of its potential returns per unit of risk. Legacy Iron Ore is currently generating about -0.22 per unit of risk. If you would invest 66.00 in Sun Silver Limited on October 29, 2024 and sell it today you would earn a total of 6.00 from holding Sun Silver Limited or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Silver Limited vs. Legacy Iron Ore
Performance |
| Timeline |
| Sun Silver Limited |
| Legacy Iron Ore |
Sun Silver and Legacy Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Silver and Legacy Iron
The main advantage of trading using opposite Sun Silver and Legacy Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Silver position performs unexpectedly, Legacy 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 Legacy Iron will offset losses from the drop in Legacy Iron's long position.| Sun Silver vs. Northern Star Resources | Sun Silver vs. Evolution Mining | Sun Silver vs. Bluescope Steel | Sun Silver vs. De Grey Mining |
| Legacy Iron vs. Bank of Queensland | Legacy Iron vs. Finexia Financial Group | Legacy Iron vs. Medibank Private | Legacy Iron vs. Bluescope Steel |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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