Correlation Between Strickland Metals and Cochlear
Can any of the company-specific risk be diversified away by investing in both Strickland Metals and Cochlear 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 Strickland Metals and Cochlear into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strickland Metals and Cochlear, you can compare the effects of market volatilities on Strickland Metals and Cochlear 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 Strickland Metals with a short position of Cochlear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strickland Metals and Cochlear.
Diversification Opportunities for Strickland Metals and Cochlear
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Strickland and Cochlear is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Strickland Metals and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear and Strickland 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 Strickland Metals are associated (or correlated) with Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of Strickland Metals i.e., Strickland Metals and Cochlear go up and down completely randomly.
Pair Corralation between Strickland Metals and Cochlear
Assuming the 90 days trading horizon Strickland Metals is expected to generate 3.67 times more return on investment than Cochlear. However, Strickland Metals is 3.67 times more volatile than Cochlear. It trades about 0.17 of its potential returns per unit of risk. Cochlear is currently generating about -0.08 per unit of risk. If you would invest 7.70 in Strickland Metals on September 14, 2024 and sell it today you would earn a total of 1.20 from holding Strickland Metals or generate 15.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strickland Metals vs. Cochlear
Performance |
| Timeline |
| Strickland Metals |
| Cochlear |
Strickland Metals and Cochlear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strickland Metals and Cochlear
The main advantage of trading using opposite Strickland Metals and Cochlear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strickland Metals position performs unexpectedly, Cochlear 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 Cochlear will offset losses from the drop in Cochlear's long position.| Strickland Metals vs. Northern Star Resources | Strickland Metals vs. Evolution Mining | Strickland Metals vs. Bluescope Steel | Strickland Metals vs. Sandfire Resources NL |
| Cochlear vs. Strickland Metals | Cochlear vs. Mirrabooka Investments | Cochlear vs. Platinum Asia Investments | Cochlear vs. Pinnacle Investment Management |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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