Correlation Between Metro Mining and Falcon Metals
Can any of the company-specific risk be diversified away by investing in both Metro Mining and Falcon Metals 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 Metro Mining and Falcon Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Mining and Falcon Metals, you can compare the effects of market volatilities on Metro Mining and Falcon Metals 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 Metro Mining with a short position of Falcon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Mining and Falcon Metals.
Diversification Opportunities for Metro Mining and Falcon Metals
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Metro and Falcon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Metro Mining and Falcon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Metals and Metro Mining 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 Metro Mining are associated (or correlated) with Falcon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Metals has no effect on the direction of Metro Mining i.e., Metro Mining and Falcon Metals go up and down completely randomly.
Pair Corralation between Metro Mining and Falcon Metals
Assuming the 90 days trading horizon Metro Mining is expected to generate 0.6 times more return on investment than Falcon Metals. However, Metro Mining is 1.66 times less risky than Falcon Metals. It trades about -0.01 of its potential returns per unit of risk. Falcon Metals is currently generating about -0.12 per unit of risk. If you would invest 5.60 in Metro Mining on September 26, 2024 and sell it today you would lose (0.10) from holding Metro Mining or give up 1.79% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Metro Mining vs. Falcon Metals
Performance |
Timeline |
Metro Mining |
Falcon Metals |
Metro Mining and Falcon Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Metro Mining and Falcon Metals
The main advantage of trading using opposite Metro Mining and Falcon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Mining position performs unexpectedly, Falcon Metals 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 Falcon Metals will offset losses from the drop in Falcon Metals' long position.Metro Mining vs. Northern Star Resources | Metro Mining vs. Evolution Mining | Metro Mining vs. Bluescope Steel | Metro Mining vs. Aneka Tambang Tbk |
Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Aneka Tambang Tbk | Falcon Metals vs. Sandfire Resources NL |
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.
Other Complementary Tools
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |