Correlation Between Defense Metals and Regulus Resources
Can any of the company-specific risk be diversified away by investing in both Defense Metals and Regulus 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 Defense Metals and Regulus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Defense Metals Corp and Regulus Resources, you can compare the effects of market volatilities on Defense Metals and Regulus 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 Defense Metals with a short position of Regulus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Defense Metals and Regulus Resources.
Diversification Opportunities for Defense Metals and Regulus Resources
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Defense and Regulus is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Defense Metals Corp and Regulus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regulus Resources and Defense 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 Defense Metals Corp are associated (or correlated) with Regulus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regulus Resources has no effect on the direction of Defense Metals i.e., Defense Metals and Regulus Resources go up and down completely randomly.
Pair Corralation between Defense Metals and Regulus Resources
Assuming the 90 days horizon Defense Metals Corp is expected to generate 2.58 times more return on investment than Regulus Resources. However, Defense Metals is 2.58 times more volatile than Regulus Resources. It trades about 0.01 of its potential returns per unit of risk. Regulus Resources is currently generating about -0.34 per unit of risk. If you would invest 7.20 in Defense Metals Corp on August 25, 2024 and sell it today you would lose (0.05) from holding Defense Metals Corp or give up 0.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Defense Metals Corp vs. Regulus Resources
Performance |
| Timeline |
| Defense Metals Corp |
| Regulus Resources |
Defense Metals and Regulus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Defense Metals and Regulus Resources
The main advantage of trading using opposite Defense Metals and Regulus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Defense Metals position performs unexpectedly, Regulus 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 Regulus Resources will offset losses from the drop in Regulus Resources' long position.| Defense Metals vs. Edison Cobalt Corp | Defense Metals vs. Baroyeca Gold Silver | Defense Metals vs. Aurelia Metals Limited | Defense Metals vs. China Rare Earth |
| Regulus Resources vs. Ascendant Resources | Regulus Resources vs. Cantex Mine Development | Regulus Resources vs. Amarc Resources | Regulus Resources vs. Sterling 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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