Correlation Between Vale SA and Jourdan Resources
Can any of the company-specific risk be diversified away by investing in both Vale SA and Jourdan Resources 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 Vale SA and Jourdan Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA ADR and Jourdan Resources, you can compare the effects of market volatilities on Vale SA and Jourdan Resources 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 Vale SA with a short position of Jourdan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Jourdan Resources.
Diversification Opportunities for Vale SA and Jourdan Resources
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vale and Jourdan is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA ADR and Jourdan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jourdan Resources and Vale SA 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 Vale SA ADR are associated (or correlated) with Jourdan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jourdan Resources has no effect on the direction of Vale SA i.e., Vale SA and Jourdan Resources go up and down completely randomly.
Pair Corralation between Vale SA and Jourdan Resources
Given the investment horizon of 90 days Vale SA ADR is expected to under-perform the Jourdan Resources. But the stock apears to be less risky and, when comparing its historical volatility, Vale SA ADR is 8.35 times less risky than Jourdan Resources. The stock trades about -0.21 of its potential returns per unit of risk. The Jourdan Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Jourdan Resources on August 28, 2024 and sell it today you would lose (0.18) from holding Jourdan Resources or give up 16.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vale SA ADR vs. Jourdan Resources
Performance |
| Timeline |
| Vale SA ADR |
| Jourdan Resources |
Vale SA and Jourdan Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and Jourdan Resources
The main advantage of trading using opposite Vale SA and Jourdan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, Jourdan Resources 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 Jourdan Resources will offset losses from the drop in Jourdan Resources' long position.| Vale SA vs. BHP Group Limited | Vale SA vs. Teck Resources Ltd | Vale SA vs. Lithium Americas Corp | Vale SA vs. MP Materials Corp |
| Jourdan Resources vs. Bravada Gold | Jourdan Resources vs. Golden Goliath Resources | Jourdan Resources vs. Silver Spruce Resources | Jourdan Resources vs. Lake Resources NL |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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