Correlation Between Falcon Metals and De Grey
Can any of the company-specific risk be diversified away by investing in both Falcon Metals and De Grey 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 Falcon Metals and De Grey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Metals and De Grey Mining, you can compare the effects of market volatilities on Falcon Metals and De Grey 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 Falcon Metals with a short position of De Grey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Metals and De Grey.
Diversification Opportunities for Falcon Metals and De Grey
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Falcon and DEG is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Metals and De Grey Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Grey Mining and Falcon 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 Falcon Metals are associated (or correlated) with De Grey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Grey Mining has no effect on the direction of Falcon Metals i.e., Falcon Metals and De Grey go up and down completely randomly.
Pair Corralation between Falcon Metals and De Grey
Assuming the 90 days trading horizon Falcon Metals is expected to under-perform the De Grey. In addition to that, Falcon Metals is 1.08 times more volatile than De Grey Mining. It trades about -0.13 of its total potential returns per unit of risk. De Grey Mining is currently generating about 0.12 per unit of volatility. If you would invest 134.00 in De Grey Mining on September 26, 2024 and sell it today you would earn a total of 44.00 from holding De Grey Mining or generate 32.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Falcon Metals vs. De Grey Mining
Performance |
Timeline |
Falcon Metals |
De Grey Mining |
Falcon Metals and De Grey Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Falcon Metals and De Grey
The main advantage of trading using opposite Falcon Metals and De Grey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Metals position performs unexpectedly, De Grey 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 De Grey will offset losses from the drop in De Grey's long position.Falcon Metals vs. Northern Star Resources | Falcon Metals vs. Evolution Mining | Falcon Metals vs. Aneka Tambang Tbk | Falcon Metals vs. Sandfire Resources NL |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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