Correlation Between Finlay Minerals and Zephyr Minerals

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

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

Diversification Opportunities for Finlay Minerals and Zephyr Minerals

0.52

Correlation Coefficient

Finlay Minerals  Zephyr Minerals

Very weak diversification

The 3 months correlation between Finlay and Zephyr is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Finlay Minerals and Zephyr Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zephyr Minerals and Finlay Minerals 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 Finlay Minerals are associated (or correlated) with Zephyr Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zephyr Minerals has no effect on the direction of Finlay Minerals i.e., Finlay Minerals and Zephyr Minerals go up and down completely randomly.

Pair Corralation between Finlay Minerals and Zephyr Minerals

Assuming the 90 days horizon Finlay Minerals is expected to generate 1.73 times more return on investment than Zephyr Minerals. However, Finlay Minerals is 1.73 times more volatile than Zephyr Minerals. It trades about 0.06 of its potential returns per unit of risk. Zephyr Minerals is currently generating about 0.01 per unit of risk. If you would invest  3.00  in Finlay Minerals on October 4, 2024 and sell it today you would lose (1.00) from holding Finlay Minerals or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.7%
Values	Daily Returns

Finlay Minerals  vs.  Zephyr Minerals

Finlay Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finlay Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Zephyr Minerals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zephyr Minerals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zephyr Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finlay Minerals and Zephyr Minerals

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

The idea behind Finlay Minerals and Zephyr Minerals 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.