Correlation Between Rio Tinto and Getty Copper
Can any of the company-specific risk be diversified away by investing in both Rio Tinto and Getty Copper 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 Rio Tinto and Getty Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rio Tinto Group and Getty Copper, you can compare the effects of market volatilities on Rio Tinto and Getty Copper 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 Rio Tinto with a short position of Getty Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rio Tinto and Getty Copper.
Diversification Opportunities for Rio Tinto and Getty Copper
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rio and Getty is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Rio Tinto Group and Getty Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Getty Copper and Rio Tinto 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 Rio Tinto Group are associated (or correlated) with Getty Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Getty Copper has no effect on the direction of Rio Tinto i.e., Rio Tinto and Getty Copper go up and down completely randomly.
Pair Corralation between Rio Tinto and Getty Copper
Assuming the 90 days horizon Rio Tinto is expected to generate 12.6 times less return on investment than Getty Copper. But when comparing it to its historical volatility, Rio Tinto Group is 10.81 times less risky than Getty Copper. It trades about 0.11 of its potential returns per unit of risk. Getty Copper is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1.11 in Getty Copper on March 14, 2024 and sell it today you would earn a total of 1.39 from holding Getty Copper or generate 125.23% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Rio Tinto Group vs. Getty Copper
Performance |
Timeline |
Rio Tinto Group |
Getty Copper |
Rio Tinto and Getty Copper Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Rio Tinto and Getty Copper
The main advantage of trading using opposite Rio Tinto and Getty Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rio Tinto position performs unexpectedly, Getty Copper 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 Getty Copper will offset losses from the drop in Getty Copper's long position.Rio Tinto vs. Northern Graphite | Rio Tinto vs. Focus Graphite | Rio Tinto vs. Altura Mining Limited | Rio Tinto vs. Vulcan Minerals |
Getty Copper vs. Northern Graphite | Getty Copper vs. Focus Graphite | Getty Copper vs. Altura Mining Limited | Getty Copper vs. Vulcan Minerals |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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