Correlation Between Falcon Metals and Bendigo

Can any of the company-specific risk be diversified away by investing in both Falcon Metals and Bendigo 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 Falcon Metals and Bendigo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falcon Metals and Bendigo And Adelaide, you can compare the effects of market volatilities on Falcon Metals and Bendigo 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 Falcon Metals with a short position of Bendigo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and Bendigo.

Diversification Opportunities for Falcon Metals and Bendigo

0.43

Correlation Coefficient

Falcon Metals  Bendigo

Very weak diversification

The 3 months correlation between Falcon and Bendigo is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and Bendigo And Adelaide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bendigo And Adelaide and Falcon Metals 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 Falcon Metals are associated (or correlated) with Bendigo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bendigo And Adelaide has no effect on the direction of Falcon Metals i.e., Falcon Metals and Bendigo go up and down completely randomly.

Pair Corralation between Falcon Metals and Bendigo

Assuming the 90 days trading horizon Falcon Metals is expected to generate 2.82 times more return on investment than Bendigo. However, Falcon Metals is 2.82 times more volatile than Bendigo And Adelaide. It trades about 0.05 of its potential returns per unit of risk. Bendigo And Adelaide is currently generating about -0.13 per unit of risk. If you would invest  13.00  in Falcon Metals on December 27, 2024 and sell it today you would earn a total of  1.00  from holding Falcon Metals or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Falcon Metals  vs.  Bendigo And Adelaide

Falcon Metals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Falcon Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bendigo And Adelaide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bendigo And Adelaide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Falcon Metals and Bendigo

The main advantage of trading using opposite Falcon Metals and Bendigo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, Bendigo 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 Bendigo will offset losses from the drop in Bendigo's long position.

The idea behind Falcon Metals and Bendigo And Adelaide pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.