Correlation Between Canstar Resources and Freegold Ventures
Can any of the company-specific risk be diversified away by investing in both Canstar Resources and Freegold Ventures 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 Canstar Resources and Freegold Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canstar Resources and Freegold Ventures Limited, you can compare the effects of market volatilities on Canstar Resources and Freegold Ventures 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 Canstar Resources with a short position of Freegold Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canstar Resources and Freegold Ventures.
Diversification Opportunities for Canstar Resources and Freegold Ventures
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canstar and Freegold is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Canstar Resources and Freegold Ventures Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freegold Ventures and Canstar Resources 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 Canstar Resources are associated (or correlated) with Freegold Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freegold Ventures has no effect on the direction of Canstar Resources i.e., Canstar Resources and Freegold Ventures go up and down completely randomly.
Pair Corralation between Canstar Resources and Freegold Ventures
Assuming the 90 days horizon Canstar Resources is expected to generate 4.09 times more return on investment than Freegold Ventures. However, Canstar Resources is 4.09 times more volatile than Freegold Ventures Limited. It trades about -0.07 of its potential returns per unit of risk. Freegold Ventures Limited is currently generating about -0.34 per unit of risk. If you would invest 3.33 in Canstar Resources on August 29, 2024 and sell it today you would lose (1.10) from holding Canstar Resources or give up 33.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canstar Resources vs. Freegold Ventures Limited
Performance |
| Timeline |
| Canstar Resources |
| Freegold Ventures |
Canstar Resources and Freegold Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canstar Resources and Freegold Ventures
The main advantage of trading using opposite Canstar Resources and Freegold Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canstar Resources position performs unexpectedly, Freegold Ventures 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 Freegold Ventures will offset losses from the drop in Freegold Ventures' long position.| Canstar Resources vs. Rockridge Resources | Canstar Resources vs. Ameriwest Lithium | Canstar Resources vs. Osisko Metals Incorporated | Canstar Resources vs. Volt Lithium Corp |
| Freegold Ventures vs. Mundoro Capital | Freegold Ventures vs. Norra Metals Corp | Freegold Ventures vs. E79 Resources Corp | Freegold Ventures vs. Voltage Metals 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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