Correlation Between Amarc Resources and Canada Carbon
Can any of the company-specific risk be diversified away by investing in both Amarc Resources and Canada Carbon 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 Amarc Resources and Canada Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amarc Resources and Canada Carbon, you can compare the effects of market volatilities on Amarc Resources and Canada Carbon 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 Amarc Resources with a short position of Canada Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amarc Resources and Canada Carbon.
Diversification Opportunities for Amarc Resources and Canada Carbon
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Amarc and Canada is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Amarc Resources and Canada Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Carbon and Amarc Resources 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 Amarc Resources are associated (or correlated) with Canada Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Carbon has no effect on the direction of Amarc Resources i.e., Amarc Resources and Canada Carbon go up and down completely randomly.
Pair Corralation between Amarc Resources and Canada Carbon
Assuming the 90 days horizon Amarc Resources is expected to generate 12.64 times less return on investment than Canada Carbon. But when comparing it to its historical volatility, Amarc Resources is 6.57 times less risky than Canada Carbon. It trades about 0.04 of its potential returns per unit of risk. Canada Carbon is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Canada Carbon on August 31, 2024 and sell it today you would lose (1.43) from holding Canada Carbon or give up 71.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Amarc Resources vs. Canada Carbon
Performance |
| Timeline |
| Amarc Resources |
| Canada Carbon |
Amarc Resources and Canada Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amarc Resources and Canada Carbon
The main advantage of trading using opposite Amarc Resources and Canada Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amarc Resources position performs unexpectedly, Canada Carbon 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 Canada Carbon will offset losses from the drop in Canada Carbon's long position.| Amarc Resources vs. Liontown Resources Limited | Amarc Resources vs. ATT Inc | Amarc Resources vs. Merck Company | Amarc Resources vs. Walt Disney |
| Canada Carbon vs. Tower Resources | Canada Carbon vs. South Star Battery | Canada Carbon vs. Kutcho Copper Corp | Canada Carbon 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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