Correlation Between Black Tusk and Red Pine
Can any of the company-specific risk be diversified away by investing in both Black Tusk and Red Pine 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 Black Tusk and Red Pine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Tusk Resources and Red Pine Exploration, you can compare the effects of market volatilities on Black Tusk and Red Pine 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 Black Tusk with a short position of Red Pine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Tusk and Red Pine.
Diversification Opportunities for Black Tusk and Red Pine
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Black and Red is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Black Tusk Resources and Red Pine Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Pine Exploration and Black Tusk 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 Black Tusk Resources are associated (or correlated) with Red Pine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Pine Exploration has no effect on the direction of Black Tusk i.e., Black Tusk and Red Pine go up and down completely randomly.
Pair Corralation between Black Tusk and Red Pine
Assuming the 90 days horizon Black Tusk Resources is expected to generate 24.19 times more return on investment than Red Pine. However, Black Tusk is 24.19 times more volatile than Red Pine Exploration. It trades about 0.82 of its potential returns per unit of risk. Red Pine Exploration is currently generating about -0.03 per unit of risk. If you would invest 0.86 in Black Tusk Resources on August 28, 2024 and sell it today you would earn a total of 6.14 from holding Black Tusk Resources or generate 713.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 9.3% |
| Values | Daily Returns |
Black Tusk Resources vs. Red Pine Exploration
Performance |
| Timeline |
| Black Tusk Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
| Red Pine Exploration |
Black Tusk and Red Pine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Tusk and Red Pine
The main advantage of trading using opposite Black Tusk and Red Pine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Tusk position performs unexpectedly, Red Pine 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 Red Pine will offset losses from the drop in Red Pine's long position.| Black Tusk vs. Palamina Corp | Black Tusk vs. Gold Springs Resource | Black Tusk vs. BTU Metals Corp | Black Tusk vs. Norsemont Mining |
| Red Pine vs. Ascendant Resources | Red Pine vs. Cantex Mine Development | Red Pine vs. Amarc Resources | Red Pine vs. Sterling Metals Corp |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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