Correlation Between Truscott Mining and Rea
Can any of the company-specific risk be diversified away by investing in both Truscott Mining and Rea 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 Rea 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 Rea Group, you can compare the effects of market volatilities on Truscott Mining and Rea 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 Rea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truscott Mining and Rea.
Diversification Opportunities for Truscott Mining and Rea
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Truscott and Rea is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Truscott Mining Corp and Rea Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rea Group 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 Rea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rea Group has no effect on the direction of Truscott Mining i.e., Truscott Mining and Rea go up and down completely randomly.
Pair Corralation between Truscott Mining and Rea
Assuming the 90 days trading horizon Truscott Mining Corp is expected to generate 0.9 times more return on investment than Rea. However, Truscott Mining Corp is 1.11 times less risky than Rea. It trades about 0.06 of its potential returns per unit of risk. Rea Group is currently generating about -0.11 per unit of risk. If you would invest 7.80 in Truscott Mining Corp on October 18, 2024 and sell it today you would earn a total of 0.10 from holding Truscott Mining Corp or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truscott Mining Corp vs. Rea Group
Performance |
| Timeline |
| Truscott Mining Corp |
| Rea Group |
Truscott Mining and Rea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truscott Mining and Rea
The main advantage of trading using opposite Truscott Mining and Rea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truscott Mining position performs unexpectedly, Rea 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 Rea will offset losses from the drop in Rea's long position.| Truscott Mining vs. Australian Agricultural | Truscott Mining vs. Iron Road | Truscott Mining vs. Duxton Broadacre Farms | Truscott Mining vs. EROAD |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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