Correlation Between Thorney Technologies and Fortescue
Can any of the company-specific risk be diversified away by investing in both Thorney Technologies and Fortescue 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 Thorney Technologies and Fortescue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thorney Technologies and Fortescue, you can compare the effects of market volatilities on Thorney Technologies and Fortescue 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 Thorney Technologies with a short position of Fortescue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thorney Technologies and Fortescue.
Diversification Opportunities for Thorney Technologies and Fortescue
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thorney and Fortescue is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Thorney Technologies and Fortescue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue and Thorney Technologies 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 Thorney Technologies are associated (or correlated) with Fortescue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue has no effect on the direction of Thorney Technologies i.e., Thorney Technologies and Fortescue go up and down completely randomly.
Pair Corralation between Thorney Technologies and Fortescue
Assuming the 90 days trading horizon Thorney Technologies is expected to generate 1.49 times more return on investment than Fortescue. However, Thorney Technologies is 1.49 times more volatile than Fortescue. It trades about 0.01 of its potential returns per unit of risk. Fortescue is currently generating about -0.02 per unit of risk. If you would invest 14.00 in Thorney Technologies on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Thorney Technologies or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thorney Technologies vs. Fortescue
Performance |
| Timeline |
| Thorney Technologies |
| Fortescue |
Thorney Technologies and Fortescue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thorney Technologies and Fortescue
The main advantage of trading using opposite Thorney Technologies and Fortescue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thorney Technologies position performs unexpectedly, Fortescue 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 Fortescue will offset losses from the drop in Fortescue's long position.| Thorney Technologies vs. ABACUS STORAGE KING | Thorney Technologies vs. Champion Iron | Thorney Technologies vs. iShares Global Healthcare | Thorney Technologies vs. Peel Mining |
| Fortescue vs. Northern Star Resources | Fortescue vs. Evolution Mining | Fortescue vs. Bluescope Steel | Fortescue vs. Aneka Tambang Tbk |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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