Correlation Between Mount Gibson and Centuria Industrial
Can any of the company-specific risk be diversified away by investing in both Mount Gibson and Centuria Industrial 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 Mount Gibson and Centuria Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mount Gibson Iron and Centuria Industrial Reit, you can compare the effects of market volatilities on Mount Gibson and Centuria Industrial 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 Mount Gibson with a short position of Centuria Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mount Gibson and Centuria Industrial.
Diversification Opportunities for Mount Gibson and Centuria Industrial
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mount and Centuria is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Centuria Industrial Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centuria Industrial Reit and Mount Gibson 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 Mount Gibson Iron are associated (or correlated) with Centuria Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centuria Industrial Reit has no effect on the direction of Mount Gibson i.e., Mount Gibson and Centuria Industrial go up and down completely randomly.
Pair Corralation between Mount Gibson and Centuria Industrial
Assuming the 90 days trading horizon Mount Gibson Iron is expected to generate 2.91 times more return on investment than Centuria Industrial. However, Mount Gibson is 2.91 times more volatile than Centuria Industrial Reit. It trades about 0.01 of its potential returns per unit of risk. Centuria Industrial Reit is currently generating about -0.19 per unit of risk. If you would invest 30.00 in Mount Gibson Iron on September 25, 2024 and sell it today you would earn a total of 0.00 from holding Mount Gibson Iron or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Mount Gibson Iron vs. Centuria Industrial Reit
Performance |
Timeline |
Mount Gibson Iron |
Centuria Industrial Reit |
Mount Gibson and Centuria Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mount Gibson and Centuria Industrial
The main advantage of trading using opposite Mount Gibson and Centuria Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson position performs unexpectedly, Centuria Industrial 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 Centuria Industrial will offset losses from the drop in Centuria Industrial's long position.Mount Gibson vs. Northern Star Resources | Mount Gibson vs. Evolution Mining | Mount Gibson vs. Bluescope Steel | Mount Gibson vs. Aneka Tambang Tbk |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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