Correlation Between Champion Iron and Insignia Financial
Can any of the company-specific risk be diversified away by investing in both Champion Iron and Insignia Financial 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 Champion Iron and Insignia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champion Iron and Insignia Financial, you can compare the effects of market volatilities on Champion Iron and Insignia Financial 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 Champion Iron with a short position of Insignia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Iron and Insignia Financial.
Diversification Opportunities for Champion Iron and Insignia Financial
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Champion and Insignia is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Champion Iron and Insignia Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insignia Financial and Champion 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 Champion Iron are associated (or correlated) with Insignia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insignia Financial has no effect on the direction of Champion Iron i.e., Champion Iron and Insignia Financial go up and down completely randomly.
Pair Corralation between Champion Iron and Insignia Financial
Assuming the 90 days trading horizon Champion Iron is expected to generate 9.88 times less return on investment than Insignia Financial. But when comparing it to its historical volatility, Champion Iron is 1.01 times less risky than Insignia Financial. It trades about 0.03 of its potential returns per unit of risk. Insignia Financial is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 252.00 in Insignia Financial on October 24, 2024 and sell it today you would earn a total of 193.00 from holding Insignia Financial or generate 76.59% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Champion Iron vs. Insignia Financial
Performance |
Timeline |
Champion Iron |
Insignia Financial |
Champion Iron and Insignia Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Champion Iron and Insignia Financial
The main advantage of trading using opposite Champion Iron and Insignia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champion Iron position performs unexpectedly, Insignia Financial 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 Insignia Financial will offset losses from the drop in Insignia Financial's long position.Champion Iron vs. Regal Funds Management | Champion Iron vs. M3 Mining | Champion Iron vs. Kalgoorlie Gold Mining | Champion Iron vs. K2 Asset Management |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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