Correlation Between Tree Island and Monument Mining
Can any of the company-specific risk be diversified away by investing in both Tree Island and Monument Mining 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 Tree Island and Monument Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tree Island Steel and Monument Mining Limited, you can compare the effects of market volatilities on Tree Island and Monument Mining 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 Tree Island with a short position of Monument Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tree Island and Monument Mining.
Diversification Opportunities for Tree Island and Monument Mining
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tree and Monument is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tree Island Steel and Monument Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Mining and Tree Island 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 Tree Island Steel are associated (or correlated) with Monument Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Mining has no effect on the direction of Tree Island i.e., Tree Island and Monument Mining go up and down completely randomly.
Pair Corralation between Tree Island and Monument Mining
Assuming the 90 days trading horizon Tree Island is expected to generate 5.82 times less return on investment than Monument Mining. But when comparing it to its historical volatility, Tree Island Steel is 2.41 times less risky than Monument Mining. It trades about 0.03 of its potential returns per unit of risk. Monument Mining Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Monument Mining Limited on September 5, 2024 and sell it today you would earn a total of 12.00 from holding Monument Mining Limited or generate 85.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Tree Island Steel vs. Monument Mining Limited
Performance |
| Timeline |
| Tree Island Steel |
| Monument Mining |
Tree Island and Monument Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tree Island and Monument Mining
The main advantage of trading using opposite Tree Island and Monument Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tree Island position performs unexpectedly, Monument Mining 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 Monument Mining will offset losses from the drop in Monument Mining's long position.| Tree Island vs. Supremex | Tree Island vs. Conifex Timber | Tree Island vs. Exco Technologies Limited | Tree Island vs. Taiga Building Products |
| Monument Mining vs. Majestic Gold Corp | Monument Mining vs. Gunpoint Exploration | Monument Mining vs. Q Gold Resources | Monument Mining vs. MAS Gold Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |