Correlation Between Predictive Discovery and Matador Mining
Can any of the company-specific risk be diversified away by investing in both Predictive Discovery and Matador Mining 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 Predictive Discovery and Matador Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Predictive Discovery Limited and Matador Mining Limited, you can compare the effects of market volatilities on Predictive Discovery and Matador Mining 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 Predictive Discovery with a short position of Matador Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Predictive Discovery and Matador Mining.
Diversification Opportunities for Predictive Discovery and Matador Mining
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Predictive and Matador is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Predictive Discovery Limited and Matador Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Mining and Predictive Discovery 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 Predictive Discovery Limited are associated (or correlated) with Matador Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matador Mining has no effect on the direction of Predictive Discovery i.e., Predictive Discovery and Matador Mining go up and down completely randomly.
Pair Corralation between Predictive Discovery and Matador Mining
Assuming the 90 days horizon Predictive Discovery is expected to generate 3.35 times less return on investment than Matador Mining. But when comparing it to its historical volatility, Predictive Discovery Limited is 2.85 times less risky than Matador Mining. It trades about 0.06 of its potential returns per unit of risk. Matador Mining Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7.05 in Matador Mining Limited on June 22, 2024 and sell it today you would lose (0.57) from holding Matador Mining Limited or give up 8.09% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.36% |
Values | Daily Returns |
Predictive Discovery Limited vs. Matador Mining Limited
Performance |
Timeline |
Predictive Discovery |
Matador Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Predictive Discovery and Matador Mining Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Predictive Discovery and Matador Mining
The main advantage of trading using opposite Predictive Discovery and Matador Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Predictive Discovery position performs unexpectedly, Matador Mining 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 Matador Mining will offset losses from the drop in Matador Mining's long position.Predictive Discovery vs. Antioquia Gold | Predictive Discovery vs. Viva Gold Corp | Predictive Discovery vs. Asante Gold | Predictive Discovery vs. Bluestone Resources |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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