Correlation Between Zanaga Iron and BP Plc
Can any of the company-specific risk be diversified away by investing in both Zanaga Iron and BP Plc 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 Zanaga Iron and BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zanaga Iron Ore and BP plc, you can compare the effects of market volatilities on Zanaga Iron and BP Plc 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 Zanaga Iron with a short position of BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zanaga Iron and BP Plc.
Diversification Opportunities for Zanaga Iron and BP Plc
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Zanaga and BP-A is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Zanaga Iron Ore and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc and Zanaga Iron 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 Zanaga Iron Ore are associated (or correlated) with BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Zanaga Iron i.e., Zanaga Iron and BP Plc go up and down completely randomly.
Pair Corralation between Zanaga Iron and BP Plc
Assuming the 90 days trading horizon Zanaga Iron Ore is expected to generate 5.1 times more return on investment than BP Plc. However, Zanaga Iron is 5.1 times more volatile than BP plc. It trades about 0.04 of its potential returns per unit of risk. BP plc is currently generating about -0.03 per unit of risk. If you would invest 560.00 in Zanaga Iron Ore on November 2, 2024 and sell it today you would earn a total of 244.00 from holding Zanaga Iron Ore or generate 43.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.99% |
| Values | Daily Returns |
Zanaga Iron Ore vs. BP plc
Performance |
| Timeline |
| Zanaga Iron Ore |
| BP plc |
Zanaga Iron and BP Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zanaga Iron and BP Plc
The main advantage of trading using opposite Zanaga Iron and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zanaga Iron position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.| Zanaga Iron vs. Charter Communications Cl | Zanaga Iron vs. Xeros Technology Group | Zanaga Iron vs. Aeorema Communications Plc | Zanaga Iron vs. Spirent Communications plc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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