Correlation Between Dalaroo Metals and Fortescue

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

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

Diversification Opportunities for Dalaroo Metals and Fortescue

-0.35

Correlation Coefficient

Dalaroo Metals  Fortescue

Very good diversification

The 3 months correlation between Dalaroo and Fortescue is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dalaroo Metals and Fortescue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue and Dalaroo Metals 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 Dalaroo Metals are associated (or correlated) with Fortescue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue has no effect on the direction of Dalaroo Metals i.e., Dalaroo Metals and Fortescue go up and down completely randomly.

Pair Corralation between Dalaroo Metals and Fortescue

Assuming the 90 days trading horizon Dalaroo Metals is expected to under-perform the Fortescue. In addition to that, Dalaroo Metals is 2.14 times more volatile than Fortescue. It trades about -0.16 of its total potential returns per unit of risk. Fortescue is currently generating about 0.1 per unit of volatility. If you would invest  1,719  in Fortescue on September 16, 2024 and sell it today you would earn a total of  229.00  from holding Fortescue or generate 13.32% return on investment over 90 days.

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

Dalaroo Metals  vs.  Fortescue

Dalaroo Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dalaroo Metals 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 essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fortescue

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fortescue are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Fortescue unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalaroo Metals and Fortescue

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

The idea behind Dalaroo Metals and Fortescue 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.