Correlation Between Black Widow and Eros Resources
Can any of the company-specific risk be diversified away by investing in both Black Widow and Eros 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 Black Widow and Eros Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Widow Resources and Eros Resources Corp, you can compare the effects of market volatilities on Black Widow and Eros 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 Black Widow with a short position of Eros Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Widow and Eros Resources.
Diversification Opportunities for Black Widow and Eros Resources
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Black and Eros is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Black Widow Resources and Eros Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eros Resources Corp and Black Widow 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 Widow Resources are associated (or correlated) with Eros Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eros Resources Corp has no effect on the direction of Black Widow i.e., Black Widow and Eros Resources go up and down completely randomly.
Pair Corralation between Black Widow and Eros Resources
Assuming the 90 days horizon Black Widow Resources is expected to generate 2.0 times more return on investment than Eros Resources. However, Black Widow is 2.0 times more volatile than Eros Resources Corp. It trades about 0.02 of its potential returns per unit of risk. Eros Resources Corp is currently generating about 0.01 per unit of risk. If you would invest 3.50 in Black Widow Resources on August 30, 2024 and sell it today you would lose (2.50) from holding Black Widow Resources or give up 71.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Widow Resources vs. Eros Resources Corp
Performance |
| Timeline |
| Black Widow Resources |
| Eros Resources Corp |
Black Widow and Eros Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Widow and Eros Resources
The main advantage of trading using opposite Black Widow and Eros Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Widow position performs unexpectedly, Eros 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 Eros Resources will offset losses from the drop in Eros Resources' long position.| Black Widow vs. First Majestic Silver | Black Widow vs. Ivanhoe Energy | Black Widow vs. Orezone Gold Corp | Black Widow vs. Faraday Copper Corp |
| Eros Resources vs. First Majestic Silver | Eros Resources vs. Ivanhoe Energy | Eros Resources vs. Orezone Gold Corp | Eros Resources vs. Faraday Copper 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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