Correlation Between Benton Resources and Canstar Resources
Can any of the company-specific risk be diversified away by investing in both Benton Resources and Canstar Resources 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 Benton Resources and Canstar Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benton Resources and Canstar Resources, you can compare the effects of market volatilities on Benton Resources and Canstar Resources 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 Benton Resources with a short position of Canstar Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benton Resources and Canstar Resources.
Diversification Opportunities for Benton Resources and Canstar Resources
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Benton and Canstar is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Benton Resources and Canstar Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canstar Resources and Benton 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 Benton Resources are associated (or correlated) with Canstar Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canstar Resources has no effect on the direction of Benton Resources i.e., Benton Resources and Canstar Resources go up and down completely randomly.
Pair Corralation between Benton Resources and Canstar Resources
Assuming the 90 days horizon Benton Resources is expected to generate 1.35 times less return on investment than Canstar Resources. In addition to that, Benton Resources is 1.26 times more volatile than Canstar Resources. It trades about 0.03 of its total potential returns per unit of risk. Canstar Resources is currently generating about 0.05 per unit of volatility. If you would invest 2.32 in Canstar Resources on September 1, 2024 and sell it today you would lose (0.19) from holding Canstar Resources or give up 8.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.7% |
| Values | Daily Returns |
Benton Resources vs. Canstar Resources
Performance |
| Timeline |
| Benton Resources |
| Canstar Resources |
Benton Resources and Canstar Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benton Resources and Canstar Resources
The main advantage of trading using opposite Benton Resources and Canstar Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benton Resources position performs unexpectedly, Canstar Resources 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 Canstar Resources will offset losses from the drop in Canstar Resources' long position.| Benton Resources vs. Aurelia Metals Limited | Benton Resources vs. Artemis Resources | Benton Resources vs. Ascendant Resources | Benton Resources vs. Altiplano Metals |
| Canstar Resources vs. Kenorland Minerals | Canstar Resources vs. Prime Mining Corp | Canstar Resources vs. Euro Manganese | Canstar Resources vs. Chalice Mining Limited |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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