Correlation Between Legacy Iron and Wam Leaders
Can any of the company-specific risk be diversified away by investing in both Legacy Iron and Wam Leaders 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 Legacy Iron and Wam Leaders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legacy Iron Ore and Wam Leaders, you can compare the effects of market volatilities on Legacy Iron and Wam Leaders 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 Legacy Iron with a short position of Wam Leaders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Wam Leaders.
Diversification Opportunities for Legacy Iron and Wam Leaders
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Legacy and Wam is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Wam Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wam Leaders and Legacy Iron 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 Legacy Iron Ore are associated (or correlated) with Wam Leaders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wam Leaders has no effect on the direction of Legacy Iron i.e., Legacy Iron and Wam Leaders go up and down completely randomly.
Pair Corralation between Legacy Iron and Wam Leaders
Assuming the 90 days trading horizon Legacy Iron Ore is expected to generate 4.44 times more return on investment than Wam Leaders. However, Legacy Iron is 4.44 times more volatile than Wam Leaders. It trades about 0.05 of its potential returns per unit of risk. Wam Leaders is currently generating about 0.05 per unit of risk. If you would invest 1.00 in Legacy Iron Ore on December 29, 2024 and sell it today you would earn a total of 0.10 from holding Legacy Iron Ore or generate 10.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Legacy Iron Ore vs. Wam Leaders
Performance |
Timeline |
Legacy Iron Ore |
Wam Leaders |
Legacy Iron and Wam Leaders Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Legacy Iron and Wam Leaders
The main advantage of trading using opposite Legacy Iron and Wam Leaders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron position performs unexpectedly, Wam Leaders 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 Wam Leaders will offset losses from the drop in Wam Leaders' long position.Legacy Iron vs. Australian United Investment | Legacy Iron vs. Mayfield Childcare | Legacy Iron vs. Autosports Group | Legacy Iron vs. Air New Zealand |
Wam Leaders vs. Rimfire Pacific Mining | Wam Leaders vs. Duketon Mining | Wam Leaders vs. Dexus Convenience Retail | Wam Leaders vs. Resolute Mining |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |