Correlation Between Canadian General and Hercules Metals
Can any of the company-specific risk be diversified away by investing in both Canadian General and Hercules Metals 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 Canadian General and Hercules Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian General Investments and Hercules Metals Corp, you can compare the effects of market volatilities on Canadian General and Hercules Metals 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 Canadian General with a short position of Hercules Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian General and Hercules Metals.
Diversification Opportunities for Canadian General and Hercules Metals
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and Hercules is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Canadian General Investments and Hercules Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hercules Metals Corp and Canadian General 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 Canadian General Investments are associated (or correlated) with Hercules Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hercules Metals Corp has no effect on the direction of Canadian General i.e., Canadian General and Hercules Metals go up and down completely randomly.
Pair Corralation between Canadian General and Hercules Metals
Assuming the 90 days trading horizon Canadian General is expected to generate 7.74 times less return on investment than Hercules Metals. But when comparing it to its historical volatility, Canadian General Investments is 6.38 times less risky than Hercules Metals. It trades about 0.06 of its potential returns per unit of risk. Hercules Metals Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Hercules Metals Corp on September 12, 2024 and sell it today you would earn a total of 49.00 from holding Hercules Metals Corp or generate 350.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian General Investments vs. Hercules Metals Corp
Performance |
| Timeline |
| Canadian General Inv |
| Hercules Metals Corp |
Canadian General and Hercules Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian General and Hercules Metals
The main advantage of trading using opposite Canadian General and Hercules Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian General position performs unexpectedly, Hercules Metals 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 Hercules Metals will offset losses from the drop in Hercules Metals' long position.| Canadian General vs. Brompton Lifeco Split | Canadian General vs. North American Financial | Canadian General vs. Prime Dividend Corp | Canadian General vs. Financial 15 Split |
| Hercules Metals vs. Arizona Gold Silver | Hercules Metals vs. Metalero Mining Corp | Hercules Metals vs. Capstone Mining Corp | Hercules Metals vs. Gatos Silver |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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