Correlation Between United States and BC IRON
Can any of the company-specific risk be diversified away by investing in both United States and BC IRON 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 United States and BC IRON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and BC IRON, you can compare the effects of market volatilities on United States and BC IRON 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 United States with a short position of BC IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and BC IRON.
Diversification Opportunities for United States and BC IRON
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and BC3 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and BC IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BC IRON and United States 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 United States Steel are associated (or correlated) with BC IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BC IRON has no effect on the direction of United States i.e., United States and BC IRON go up and down completely randomly.
Pair Corralation between United States and BC IRON
Assuming the 90 days trading horizon United States Steel is expected to under-perform the BC IRON. In addition to that, United States is 1.22 times more volatile than BC IRON. It trades about -0.1 of its total potential returns per unit of risk. BC IRON is currently generating about 0.02 per unit of volatility. If you would invest 16.00 in BC IRON on October 12, 2024 and sell it today you would earn a total of 0.00 from holding BC IRON or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. BC IRON
Performance |
| Timeline |
| United States Steel |
| BC IRON |
United States and BC IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and BC IRON
The main advantage of trading using opposite United States and BC IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, BC IRON 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 BC IRON will offset losses from the drop in BC IRON's long position.| United States vs. American Public Education | United States vs. Monument Mining Limited | United States vs. Adtalem Global Education | United States vs. Globex Mining Enterprises |
| BC IRON vs. Gold Road Resources | BC IRON vs. TRAINLINE PLC LS | BC IRON vs. SBM OFFSHORE | BC IRON vs. Treasury Wine Estates |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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