Correlation Between Carawine Resources and Carlton Investments
Can any of the company-specific risk be diversified away by investing in both Carawine Resources and Carlton Investments 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 Carawine Resources and Carlton Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carawine Resources Limited and Carlton Investments, you can compare the effects of market volatilities on Carawine Resources and Carlton Investments 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 Carawine Resources with a short position of Carlton Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carawine Resources and Carlton Investments.
Diversification Opportunities for Carawine Resources and Carlton Investments
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carawine and Carlton is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Carawine Resources Limited and Carlton Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlton Investments and Carawine 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 Carawine Resources Limited are associated (or correlated) with Carlton Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlton Investments has no effect on the direction of Carawine Resources i.e., Carawine Resources and Carlton Investments go up and down completely randomly.
Pair Corralation between Carawine Resources and Carlton Investments
Assuming the 90 days trading horizon Carawine Resources Limited is expected to generate 4.71 times more return on investment than Carlton Investments. However, Carawine Resources is 4.71 times more volatile than Carlton Investments. It trades about 0.02 of its potential returns per unit of risk. Carlton Investments is currently generating about 0.02 per unit of risk. If you would invest 11.00 in Carawine Resources Limited on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Carawine Resources Limited or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carawine Resources Limited vs. Carlton Investments
Performance |
| Timeline |
| Carawine Resources |
| Carlton Investments |
Carawine Resources and Carlton Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carawine Resources and Carlton Investments
The main advantage of trading using opposite Carawine Resources and Carlton Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carawine Resources position performs unexpectedly, Carlton Investments 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 Carlton Investments will offset losses from the drop in Carlton Investments' long position.| Carawine Resources vs. Northern Star Resources | Carawine Resources vs. Evolution Mining | Carawine Resources vs. Bluescope Steel | Carawine Resources vs. Sandfire Resources NL |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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