Correlation Between First National and Labrador Iron
Can any of the company-specific risk be diversified away by investing in both First National and Labrador 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 First National and Labrador Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First National Financial and Labrador Iron Ore, you can compare the effects of market volatilities on First National and Labrador 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 First National with a short position of Labrador Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of First National and Labrador Iron.
Diversification Opportunities for First National and Labrador Iron
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Labrador is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding First National Financial and Labrador Iron Ore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Labrador Iron Ore and First National 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 First National Financial are associated (or correlated) with Labrador Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Labrador Iron Ore has no effect on the direction of First National i.e., First National and Labrador Iron go up and down completely randomly.
Pair Corralation between First National and Labrador Iron
Assuming the 90 days trading horizon First National is expected to generate 2.44 times less return on investment than Labrador Iron. In addition to that, First National is 1.1 times more volatile than Labrador Iron Ore. It trades about 0.03 of its total potential returns per unit of risk. Labrador Iron Ore is currently generating about 0.07 per unit of volatility. If you would invest 2,864 in Labrador Iron Ore on December 30, 2024 and sell it today you would earn a total of 130.00 from holding Labrador Iron Ore or generate 4.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
First National Financial vs. Labrador Iron Ore
Performance |
Timeline |
First National Financial |
Labrador Iron Ore |
First National and Labrador Iron Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with First National and Labrador Iron
The main advantage of trading using opposite First National and Labrador Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First National position performs unexpectedly, Labrador 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 Labrador Iron will offset losses from the drop in Labrador Iron's long position.First National vs. Nicola Mining | First National vs. Diamond Estates Wines | First National vs. Hemisphere Energy | First National vs. Data Communications Management |
Labrador Iron vs. Keyera Corp | Labrador Iron vs. Russel Metals | Labrador Iron vs. Freehold Royalties | Labrador Iron vs. Capital Power |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Risk-Return Analysis View associations between returns expected from investment and the risk you assume |