Correlation Between Fortescue Metals and LIFE +

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

By analyzing existing cross correlation between Fortescue Metals Group and LIFE BANC SPLIT, you can compare the effects of market volatilities on Fortescue Metals and LIFE + 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 Fortescue Metals with a short position of LIFE +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and LIFE +.

Diversification Opportunities for Fortescue Metals and LIFE +

-0.14

Correlation Coefficient

Fortescue Metals  LIFE +

Good diversification

The 3 months correlation between Fortescue and LIFE is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and LIFE BANC SPLIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE BANC SPLIT and Fortescue 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 Fortescue Metals Group are associated (or correlated) with LIFE +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE BANC SPLIT has no effect on the direction of Fortescue Metals i.e., Fortescue Metals and LIFE + go up and down completely randomly.

Pair Corralation between Fortescue Metals and LIFE +

Assuming the 90 days horizon Fortescue Metals is expected to generate 2.64 times less return on investment than LIFE +. But when comparing it to its historical volatility, Fortescue Metals Group is 1.42 times less risky than LIFE +. It trades about 0.02 of its potential returns per unit of risk. LIFE BANC SPLIT is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  449.00  in LIFE BANC SPLIT on October 24, 2024 and sell it today you would earn a total of  136.00  from holding LIFE BANC SPLIT or generate 30.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Fortescue Metals Group  vs.  LIFE BANC SPLIT

Fortescue Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fortescue Metals Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fortescue Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

LIFE BANC SPLIT

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LIFE BANC SPLIT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, LIFE + may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Fortescue Metals and LIFE +

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

The idea behind Fortescue Metals Group and LIFE BANC SPLIT 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.