Correlation Between Benton Resources and Cornish Metals
Can any of the company-specific risk be diversified away by investing in both Benton Resources and Cornish Metals 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 Cornish Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benton Resources and Cornish Metals, you can compare the effects of market volatilities on Benton Resources and Cornish Metals 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 Cornish Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benton Resources and Cornish Metals.
Diversification Opportunities for Benton Resources and Cornish Metals
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Benton and Cornish is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Benton Resources and Cornish Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornish Metals 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 Cornish Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornish Metals has no effect on the direction of Benton Resources i.e., Benton Resources and Cornish Metals go up and down completely randomly.
Pair Corralation between Benton Resources and Cornish Metals
Assuming the 90 days horizon Benton Resources is expected to generate 1.56 times less return on investment than Cornish Metals. But when comparing it to its historical volatility, Benton Resources is 1.04 times less risky than Cornish Metals. It trades about 0.03 of its potential returns per unit of risk. Cornish Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Cornish Metals on September 1, 2024 and sell it today you would lose (5.00) from holding Cornish Metals or give up 45.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.57% |
| Values | Daily Returns |
Benton Resources vs. Cornish Metals
Performance |
| Timeline |
| Benton Resources |
| Cornish Metals |
Benton Resources and Cornish Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benton Resources and Cornish Metals
The main advantage of trading using opposite Benton Resources and Cornish Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benton Resources position performs unexpectedly, Cornish Metals 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 Cornish Metals will offset losses from the drop in Cornish Metals' long position.| Benton Resources vs. Aurelia Metals Limited | Benton Resources vs. Artemis Resources | Benton Resources vs. Ascendant Resources | Benton Resources vs. Altiplano Metals |
| Cornish Metals vs. South32 Limited | Cornish Metals vs. NioCorp Developments Ltd | Cornish Metals vs. HUMANA INC | Cornish Metals vs. SCOR PK |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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