Correlation Between RIO Tinto and Centuria Industrial

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Can any of the company-specific risk be diversified away by investing in both RIO Tinto and Centuria Industrial 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 Centuria Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RIO Tinto and Centuria Industrial REIT, you can compare the effects of market volatilities on RIO Tinto and Centuria Industrial 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 Centuria Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of RIO Tinto and Centuria Industrial.

Diversification Opportunities for RIO Tinto and Centuria Industrial

-0.52
  Correlation Coefficient

Excellent diversification

The 3 months correlation between RIO and Centuria is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding RIO Tinto and Centuria Industrial REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centuria Industrial REIT 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 are associated (or correlated) with Centuria Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centuria Industrial REIT has no effect on the direction of RIO Tinto i.e., RIO Tinto and Centuria Industrial go up and down completely randomly.

Pair Corralation between RIO Tinto and Centuria Industrial

Assuming the 90 days trading horizon RIO Tinto is expected to generate 5.59 times less return on investment than Centuria Industrial. In addition to that, RIO Tinto is 1.55 times more volatile than Centuria Industrial REIT. It trades about 0.02 of its total potential returns per unit of risk. Centuria Industrial REIT is currently generating about 0.2 per unit of volatility. If you would invest  285.00  in Centuria Industrial REIT on April 20, 2025 and sell it today you would earn a total of  30.00  from holding Centuria Industrial REIT or generate 10.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

RIO Tinto  vs.  Centuria Industrial REIT

 Performance 
       Timeline  
RIO Tinto 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in RIO Tinto are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, RIO Tinto is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Centuria Industrial REIT 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Centuria Industrial REIT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Centuria Industrial may actually be approaching a critical reversion point that can send shares even higher in August 2025.

RIO Tinto and Centuria Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with RIO Tinto and Centuria Industrial

The main advantage of trading using opposite RIO Tinto and Centuria Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RIO Tinto position performs unexpectedly, Centuria Industrial 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 Centuria Industrial will offset losses from the drop in Centuria Industrial's long position.
The idea behind RIO Tinto and Centuria Industrial REIT 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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