Correlation Between Intuitive Investments and Rio Tinto

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

By analyzing existing cross correlation between Intuitive Investments Group and Rio Tinto PLC, you can compare the effects of market volatilities on Intuitive Investments and Rio Tinto 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 Intuitive Investments with a short position of Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Investments and Rio Tinto.

Diversification Opportunities for Intuitive Investments and Rio Tinto

0.76

Correlation Coefficient

Intuitive Investments  Rio Tinto

Poor diversification

The 3 months correlation between Intuitive and Rio is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Investments Group and Rio Tinto PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto PLC and Intuitive Investments 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 Intuitive Investments Group are associated (or correlated) with Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto PLC has no effect on the direction of Intuitive Investments i.e., Intuitive Investments and Rio Tinto go up and down completely randomly.

Pair Corralation between Intuitive Investments and Rio Tinto

Assuming the 90 days trading horizon Intuitive Investments Group is expected to under-perform the Rio Tinto. In addition to that, Intuitive Investments is 1.39 times more volatile than Rio Tinto PLC. It trades about -0.32 of its total potential returns per unit of risk. Rio Tinto PLC is currently generating about -0.17 per unit of volatility. If you would invest  491,550  in Rio Tinto PLC on September 28, 2024 and sell it today you would lose (21,550) from holding Rio Tinto PLC or give up 4.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Intuitive Investments Group  vs.  Rio Tinto PLC

Intuitive Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intuitive Investments Group 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Rio Tinto PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rio Tinto PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Intuitive Investments and Rio Tinto

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

The idea behind Intuitive Investments Group and Rio Tinto PLC 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.