Correlation Between Canadian Palladium and Scotch Creek
Can any of the company-specific risk be diversified away by investing in both Canadian Palladium and Scotch Creek 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 Palladium and Scotch Creek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Palladium Resources and Scotch Creek Ventures, you can compare the effects of market volatilities on Canadian Palladium and Scotch Creek 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 Palladium with a short position of Scotch Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Palladium and Scotch Creek.
Diversification Opportunities for Canadian Palladium and Scotch Creek
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Scotch is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Palladium Resources and Scotch Creek Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scotch Creek Ventures and Canadian Palladium 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 Palladium Resources are associated (or correlated) with Scotch Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scotch Creek Ventures has no effect on the direction of Canadian Palladium i.e., Canadian Palladium and Scotch Creek go up and down completely randomly.
Pair Corralation between Canadian Palladium and Scotch Creek
Assuming the 90 days horizon Canadian Palladium Resources is expected to generate 0.58 times more return on investment than Scotch Creek. However, Canadian Palladium Resources is 1.72 times less risky than Scotch Creek. It trades about -0.02 of its potential returns per unit of risk. Scotch Creek Ventures is currently generating about -0.06 per unit of risk. If you would invest 5.50 in Canadian Palladium Resources on November 5, 2024 and sell it today you would lose (0.80) from holding Canadian Palladium Resources or give up 14.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Canadian Palladium Resources vs. Scotch Creek Ventures
Performance |
| Timeline |
| Canadian Palladium |
| Scotch Creek Ventures |
Canadian Palladium and Scotch Creek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Palladium and Scotch Creek
The main advantage of trading using opposite Canadian Palladium and Scotch Creek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Palladium position performs unexpectedly, Scotch Creek 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 Scotch Creek will offset losses from the drop in Scotch Creek's long position.| Canadian Palladium vs. Aurelia Metals Limited | Canadian Palladium vs. Artemis Resources | Canadian Palladium vs. Azimut Exploration | Canadian Palladium vs. Champion Bear Resources |
| Scotch Creek vs. Alpha Copper Corp | Scotch Creek vs. American Rare Earths | Scotch Creek vs. Placer Creek Mining | Scotch Creek vs. Ameriwest Lithium |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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