Correlation Between MetalsGrove Mining and Seven West

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

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

Diversification Opportunities for MetalsGrove Mining and Seven West

0.78

Correlation Coefficient

MetalsGrove Mining  Seven West

Poor diversification

The 3 months correlation between MetalsGrove and Seven is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding MetalsGrove Mining and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media and MetalsGrove 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 MetalsGrove Mining are associated (or correlated) with Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of MetalsGrove Mining i.e., MetalsGrove Mining and Seven West go up and down completely randomly.

Pair Corralation between MetalsGrove Mining and Seven West

Assuming the 90 days trading horizon MetalsGrove Mining is expected to under-perform the Seven West. In addition to that, MetalsGrove Mining is 1.11 times more volatile than Seven West Media. It trades about -0.22 of its total potential returns per unit of risk. Seven West Media is currently generating about -0.1 per unit of volatility. If you would invest  18.00  in Seven West Media on September 21, 2024 and sell it today you would lose (4.00) from holding Seven West Media or give up 22.22% of portfolio value over 90 days.

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

MetalsGrove Mining  vs.  Seven West Media

MetalsGrove Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MetalsGrove Mining 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 basic 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.

Seven West Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seven West Media 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 primary 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.

Pair Trading with MetalsGrove Mining and Seven West

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

The idea behind MetalsGrove Mining and Seven West Media 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.