Correlation Between Canadian Palladium and StrikePoint Gold
Can any of the company-specific risk be diversified away by investing in both Canadian Palladium and StrikePoint Gold 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 StrikePoint Gold 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 StrikePoint Gold, you can compare the effects of market volatilities on Canadian Palladium and StrikePoint Gold 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 StrikePoint Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Palladium and StrikePoint Gold.
Diversification Opportunities for Canadian Palladium and StrikePoint Gold
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and StrikePoint is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Palladium Resources and StrikePoint Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StrikePoint Gold 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 StrikePoint Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StrikePoint Gold has no effect on the direction of Canadian Palladium i.e., Canadian Palladium and StrikePoint Gold go up and down completely randomly.
Pair Corralation between Canadian Palladium and StrikePoint Gold
Assuming the 90 days horizon Canadian Palladium is expected to generate 64.13 times less return on investment than StrikePoint Gold. But when comparing it to its historical volatility, Canadian Palladium Resources is 8.23 times less risky than StrikePoint Gold. It trades about 0.02 of its potential returns per unit of risk. StrikePoint Gold is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 37.00 in StrikePoint Gold on August 31, 2024 and sell it today you would lose (22.00) from holding StrikePoint Gold or give up 59.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Canadian Palladium Resources vs. StrikePoint Gold
Performance |
| Timeline |
| Canadian Palladium |
| StrikePoint Gold |
Canadian Palladium and StrikePoint Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Palladium and StrikePoint Gold
The main advantage of trading using opposite Canadian Palladium and StrikePoint Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Palladium position performs unexpectedly, StrikePoint Gold 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 StrikePoint Gold will offset losses from the drop in StrikePoint Gold's long position.| Canadian Palladium vs. Liontown Resources Limited | Canadian Palladium vs. ATT Inc | Canadian Palladium vs. Merck Company | Canadian Palladium vs. Walt Disney |
| StrikePoint Gold vs. Liontown Resources Limited | StrikePoint Gold vs. ATT Inc | StrikePoint Gold vs. Merck Company | StrikePoint Gold vs. Walt Disney |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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