Correlation Between North Peak and Red Pine
Can any of the company-specific risk be diversified away by investing in both North Peak 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 North Peak and Red Pine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Peak Resources and Red Pine Exploration, you can compare the effects of market volatilities on North Peak 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 North Peak with a short position of Red Pine. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Peak and Red Pine.
Diversification Opportunities for North Peak and Red Pine
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between North and Red is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding North Peak 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 North Peak 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 North Peak 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 North Peak i.e., North Peak and Red Pine go up and down completely randomly.
Pair Corralation between North Peak and Red Pine
Assuming the 90 days horizon North Peak Resources is expected to under-perform the Red Pine. But the pink sheet apears to be less risky and, when comparing its historical volatility, North Peak Resources is 1.59 times less risky than Red Pine. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Red Pine Exploration is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Red Pine Exploration on November 27, 2024 and sell it today you would earn a total of 0.79 from holding Red Pine Exploration or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Peak Resources vs. Red Pine Exploration
Performance |
| Timeline |
| North Peak Resources |
| Red Pine Exploration |
North Peak and Red Pine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Peak and Red Pine
The main advantage of trading using opposite North Peak and Red Pine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Peak 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.| North Peak vs. Lavras Gold Corp | North Peak vs. TRU Precious Metals | North Peak vs. Orefinders Resources | North Peak vs. Nine Mile Metals |
| Red Pine vs. Endurance Gold | Red Pine vs. Altamira Gold Corp | Red Pine vs. Grande Portage Resources | Red Pine vs. Tectonic Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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