Correlation Between Benton Resources and Sassy Resources
Can any of the company-specific risk be diversified away by investing in both Benton Resources and Sassy 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 Sassy 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 Sassy Resources, you can compare the effects of market volatilities on Benton Resources and Sassy 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 Sassy Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benton Resources and Sassy Resources.
Diversification Opportunities for Benton Resources and Sassy Resources
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Benton and Sassy is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Benton Resources and Sassy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sassy 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 Sassy Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sassy Resources has no effect on the direction of Benton Resources i.e., Benton Resources and Sassy Resources go up and down completely randomly.
Pair Corralation between Benton Resources and Sassy Resources
Assuming the 90 days horizon Benton Resources is expected to generate 2.95 times more return on investment than Sassy Resources. However, Benton Resources is 2.95 times more volatile than Sassy Resources. It trades about -0.07 of its potential returns per unit of risk. Sassy Resources is currently generating about -0.27 per unit of risk. If you would invest 8.00 in Benton Resources on September 3, 2024 and sell it today you would lose (3.00) from holding Benton Resources or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Benton Resources vs. Sassy Resources
Performance |
| Timeline |
| Benton Resources |
| Sassy Resources |
Benton Resources and Sassy Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benton Resources and Sassy Resources
The main advantage of trading using opposite Benton Resources and Sassy Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benton Resources position performs unexpectedly, Sassy 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 Sassy Resources will offset losses from the drop in Sassy Resources' long position.| Benton Resources vs. Aurelia Metals Limited | Benton Resources vs. Artemis Resources | Benton Resources vs. Ascendant Resources | Benton Resources vs. Altiplano Metals |
| Sassy Resources vs. Qubec Nickel Corp | Sassy Resources vs. IGO Limited | Sassy Resources vs. Avarone Metals | Sassy Resources vs. Adriatic Metals PLC |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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