Correlation Between Truscott Mining and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Truscott Mining and Insignia Financial 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 Truscott Mining and Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truscott Mining Corp and Insignia Financial, you can compare the effects of market volatilities on Truscott Mining and Insignia Financial 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 Truscott Mining with a short position of Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truscott Mining and Insignia Financial.
Diversification Opportunities for Truscott Mining and Insignia Financial
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Truscott and Insignia is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Truscott Mining Corp and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial and Truscott Mining 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 Truscott Mining Corp are associated (or correlated) with Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Truscott Mining i.e., Truscott Mining and Insignia Financial go up and down completely randomly.
Pair Corralation between Truscott Mining and Insignia Financial
Assuming the 90 days trading horizon Truscott Mining Corp is expected to generate 3.76 times more return on investment than Insignia Financial. However, Truscott Mining is 3.76 times more volatile than Insignia Financial. It trades about 0.01 of its potential returns per unit of risk. Insignia Financial is currently generating about -0.13 per unit of risk. If you would invest 7.80 in Truscott Mining Corp on September 1, 2024 and sell it today you would lose (0.30) from holding Truscott Mining Corp or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truscott Mining Corp vs. Insignia Financial
Performance |
| Timeline |
| Truscott Mining Corp |
| Insignia Financial |
Truscott Mining and Insignia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truscott Mining and Insignia Financial
The main advantage of trading using opposite Truscott Mining and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truscott Mining position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.| Truscott Mining vs. Northern Star Resources | Truscott Mining vs. Evolution Mining | Truscott Mining vs. Bluescope Steel | Truscott Mining vs. Sandfire Resources NL |
| Insignia Financial vs. Retail Food Group | Insignia Financial vs. Clime Investment Management | Insignia Financial vs. Diversified United Investment | Insignia Financial vs. Duxton Broadacre Farms |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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