Correlation Between Cerrado Gold and National Bank
Can any of the company-specific risk be diversified away by investing in both Cerrado Gold and National Bank 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 Cerrado Gold and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerrado Gold Corp and National Bank of, you can compare the effects of market volatilities on Cerrado Gold and National Bank 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 Cerrado Gold with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerrado Gold and National Bank.
Diversification Opportunities for Cerrado Gold and National Bank
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cerrado and National is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cerrado Gold Corp and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Cerrado Gold 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 Cerrado Gold Corp are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Cerrado Gold i.e., Cerrado Gold and National Bank go up and down completely randomly.
Pair Corralation between Cerrado Gold and National Bank
Assuming the 90 days trading horizon Cerrado Gold Corp is expected to generate 16.66 times more return on investment than National Bank. However, Cerrado Gold is 16.66 times more volatile than National Bank of. It trades about 0.2 of its potential returns per unit of risk. National Bank of is currently generating about -0.09 per unit of risk. If you would invest 35.00 in Cerrado Gold Corp on October 25, 2024 and sell it today you would earn a total of 9.00 from holding Cerrado Gold Corp or generate 25.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Cerrado Gold Corp vs. National Bank of
Performance |
| Timeline |
| Cerrado Gold Corp |
| National Bank |
Cerrado Gold and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cerrado Gold and National Bank
The main advantage of trading using opposite Cerrado Gold and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerrado Gold position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Cerrado Gold vs. National Bank of | Cerrado Gold vs. Richelieu Hardware | Cerrado Gold vs. Royal Bank of | Cerrado Gold vs. Financial 15 Split |
| National Bank vs. Homerun Resources | National Bank vs. Brookfield Investments | National Bank vs. Summa Silver Corp | National Bank vs. Endeavour Silver 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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