Correlation Between CANEX Metals and Rainy Mountain
Can any of the company-specific risk be diversified away by investing in both CANEX Metals and Rainy Mountain 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 CANEX Metals and Rainy Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CANEX Metals and Rainy Mountain Royalty, you can compare the effects of market volatilities on CANEX Metals and Rainy Mountain 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 CANEX Metals with a short position of Rainy Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANEX Metals and Rainy Mountain.
Diversification Opportunities for CANEX Metals and Rainy Mountain
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between CANEX and Rainy is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CANEX Metals and Rainy Mountain Royalty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rainy Mountain Royalty and CANEX Metals 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 CANEX Metals are associated (or correlated) with Rainy Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rainy Mountain Royalty has no effect on the direction of CANEX Metals i.e., CANEX Metals and Rainy Mountain go up and down completely randomly.
Pair Corralation between CANEX Metals and Rainy Mountain
Assuming the 90 days trading horizon CANEX Metals is expected to generate 2.69 times more return on investment than Rainy Mountain. However, CANEX Metals is 2.69 times more volatile than Rainy Mountain Royalty. It trades about 0.05 of its potential returns per unit of risk. Rainy Mountain Royalty is currently generating about -0.22 per unit of risk. If you would invest 4.00 in CANEX Metals on September 4, 2024 and sell it today you would earn a total of 0.00 from holding CANEX Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CANEX Metals vs. Rainy Mountain Royalty
Performance |
| Timeline |
| CANEX Metals |
| Rainy Mountain Royalty |
CANEX Metals and Rainy Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CANEX Metals and Rainy Mountain
The main advantage of trading using opposite CANEX Metals and Rainy Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CANEX Metals position performs unexpectedly, Rainy Mountain 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 Rainy Mountain will offset losses from the drop in Rainy Mountain's long position.| CANEX Metals vs. First Majestic Silver | CANEX Metals vs. Ivanhoe Energy | CANEX Metals vs. Orezone Gold Corp | CANEX Metals vs. Faraday Copper Corp |
| Rainy Mountain vs. First Majestic Silver | Rainy Mountain vs. Ivanhoe Energy | Rainy Mountain vs. Orezone Gold Corp | Rainy Mountain 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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