Correlation Between Vale SA and All Iron
Can any of the company-specific risk be diversified away by investing in both Vale SA and All 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 Vale SA and All Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vale SA and All Iron Re, you can compare the effects of market volatilities on Vale SA and All 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 Vale SA with a short position of All Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and All Iron.
Diversification Opportunities for Vale SA and All Iron
Good diversification
The 3 months correlation between Vale and All is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA and All Iron Re in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on All Iron Re 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 are associated (or correlated) with All Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of All Iron Re has no effect on the direction of Vale SA i.e., Vale SA and All Iron go up and down completely randomly.
Pair Corralation between Vale SA and All Iron
Assuming the 90 days trading horizon Vale SA is expected to under-perform the All Iron. In addition to that, Vale SA is 1.0 times more volatile than All Iron Re. It trades about -0.05 of its total potential returns per unit of risk. All Iron Re is currently generating about 0.04 per unit of volatility. If you would invest 973.00 in All Iron Re on September 3, 2024 and sell it today you would earn a total of 67.00 from holding All Iron Re or generate 6.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Vale SA vs. All Iron Re
Performance |
| Timeline |
| Vale SA |
| All Iron Re |
Vale SA and All Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vale SA and All Iron
The main advantage of trading using opposite Vale SA and All Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vale SA position performs unexpectedly, All 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 All Iron will offset losses from the drop in All Iron's long position.| Vale SA vs. Technomeca Aerospace SA | Vale SA vs. Techo Hogar SOCIMI, | Vale SA vs. Neinor Homes SLU | Vale SA vs. Hispanotels Inversiones SOCIMI |
| All Iron vs. Merlin Properties SOCIMI | All Iron vs. Metrovacesa SA | All Iron vs. Elecnor SA | All Iron vs. Mapfre |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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