Correlation Between Centrex Metals and Wildcat Resources
Can any of the company-specific risk be diversified away by investing in both Centrex Metals and Wildcat Resources 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 Centrex Metals and Wildcat Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centrex Metals and Wildcat Resources, you can compare the effects of market volatilities on Centrex Metals and Wildcat Resources 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 Centrex Metals with a short position of Wildcat Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centrex Metals and Wildcat Resources.
Diversification Opportunities for Centrex Metals and Wildcat Resources
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Centrex and Wildcat is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Centrex Metals and Wildcat Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wildcat Resources and Centrex 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 Centrex Metals are associated (or correlated) with Wildcat Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wildcat Resources has no effect on the direction of Centrex Metals i.e., Centrex Metals and Wildcat Resources go up and down completely randomly.
Pair Corralation between Centrex Metals and Wildcat Resources
Assuming the 90 days trading horizon Centrex Metals is expected to under-perform the Wildcat Resources. But the stock apears to be less risky and, when comparing its historical volatility, Centrex Metals is 1.15 times less risky than Wildcat Resources. The stock trades about -0.11 of its potential returns per unit of risk. The Wildcat Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Wildcat Resources on October 12, 2024 and sell it today you would lose (27.00) from holding Wildcat Resources or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centrex Metals vs. Wildcat Resources
Performance |
| Timeline |
| Centrex Metals |
| Wildcat Resources |
Centrex Metals and Wildcat Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centrex Metals and Wildcat Resources
The main advantage of trading using opposite Centrex Metals and Wildcat Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centrex Metals position performs unexpectedly, Wildcat Resources 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 Wildcat Resources will offset losses from the drop in Wildcat Resources' long position.| Centrex Metals vs. Falcon Metals | Centrex Metals vs. MetalsGrove Mining | Centrex Metals vs. ACDC Metals | Centrex Metals vs. Super Retail Group |
| Wildcat Resources vs. Aeon Metals | Wildcat Resources vs. Centrex Metals | Wildcat Resources vs. Centuria Industrial Reit | Wildcat Resources vs. Aussie Broadband |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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