Correlation Between BASE and Maxwell Resource
Can any of the company-specific risk be diversified away by investing in both BASE and Maxwell Resource 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 BASE and Maxwell Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASE Inc and Maxwell Resource, you can compare the effects of market volatilities on BASE and Maxwell Resource 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 BASE with a short position of Maxwell Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASE and Maxwell Resource.
Diversification Opportunities for BASE and Maxwell Resource
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BASE and Maxwell is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Maxwell Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxwell Resource and BASE 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 BASE Inc are associated (or correlated) with Maxwell Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxwell Resource has no effect on the direction of BASE i.e., BASE and Maxwell Resource go up and down completely randomly.
Pair Corralation between BASE and Maxwell Resource
Assuming the 90 days horizon BASE is expected to generate 1.68 times less return on investment than Maxwell Resource. But when comparing it to its historical volatility, BASE Inc is 4.75 times less risky than Maxwell Resource. It trades about 0.19 of its potential returns per unit of risk. Maxwell Resource is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.20 in Maxwell Resource on August 28, 2024 and sell it today you would lose (0.04) from holding Maxwell Resource or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
BASE Inc vs. Maxwell Resource
Performance |
| Timeline |
| BASE Inc |
| Maxwell Resource |
BASE and Maxwell Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASE and Maxwell Resource
The main advantage of trading using opposite BASE and Maxwell Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASE position performs unexpectedly, Maxwell Resource 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 Maxwell Resource will offset losses from the drop in Maxwell Resource's long position.| BASE vs. CurrentC Power | BASE vs. Agent Information Software | BASE vs. Maxwell Resource | BASE vs. Ackroo Inc |
| Maxwell Resource vs. Boxlight Corp Class | Maxwell Resource vs. Siyata Mobile | Maxwell Resource vs. ClearOne | Maxwell Resource vs. HUMANA INC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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