Correlation Between Black Rock and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both Black Rock and Sandfire 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 Black Rock and Sandfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Sandfire Resources NL, you can compare the effects of market volatilities on Black Rock and Sandfire 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 Black Rock with a short position of Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Sandfire Resources.
Diversification Opportunities for Black Rock and Sandfire Resources
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Black and Sandfire is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Sandfire Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources and Black Rock 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 Black Rock Mining are associated (or correlated) with Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of Black Rock i.e., Black Rock and Sandfire Resources go up and down completely randomly.
Pair Corralation between Black Rock and Sandfire Resources
Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Sandfire Resources. In addition to that, Black Rock is 2.19 times more volatile than Sandfire Resources NL. It trades about -0.04 of its total potential returns per unit of risk. Sandfire Resources NL is currently generating about 0.06 per unit of volatility. If you would invest 543.00 in Sandfire Resources NL on September 24, 2024 and sell it today you would earn a total of 380.00 from holding Sandfire Resources NL or generate 69.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Black Rock Mining vs. Sandfire Resources NL
Performance |
Timeline |
Black Rock Mining |
Sandfire Resources |
Black Rock and Sandfire Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Black Rock and Sandfire Resources
The main advantage of trading using opposite Black Rock and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock position performs unexpectedly, Sandfire 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Aneka Tambang Tbk |
Sandfire Resources vs. Queste Communications | Sandfire Resources vs. Black Rock Mining | Sandfire Resources vs. M3 Mining | Sandfire Resources vs. Perseus Mining |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Stocks Directory Find actively traded stocks across global markets | |
Content Syndication Quickly integrate customizable finance content to your own investment portal |