Correlation Between Cartier Resources and Galway Metals
Can any of the company-specific risk be diversified away by investing in both Cartier Resources and Galway Metals 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 Cartier Resources and Galway Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cartier Resources and Galway Metals, you can compare the effects of market volatilities on Cartier Resources and Galway Metals 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 Cartier Resources with a short position of Galway Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cartier Resources and Galway Metals.
Diversification Opportunities for Cartier Resources and Galway Metals
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cartier and Galway is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cartier Resources and Galway Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galway Metals and Cartier 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 Cartier Resources are associated (or correlated) with Galway Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galway Metals has no effect on the direction of Cartier Resources i.e., Cartier Resources and Galway Metals go up and down completely randomly.
Pair Corralation between Cartier Resources and Galway Metals
Assuming the 90 days horizon Cartier Resources is expected to under-perform the Galway Metals. But the stock apears to be less risky and, when comparing its historical volatility, Cartier Resources is 1.48 times less risky than Galway Metals. The stock trades about -0.29 of its potential returns per unit of risk. The Galway Metals is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Galway Metals on August 29, 2024 and sell it today you would lose (15.00) from holding Galway Metals or give up 24.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cartier Resources vs. Galway Metals
Performance |
| Timeline |
| Cartier Resources |
| Galway Metals |
Cartier Resources and Galway Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cartier Resources and Galway Metals
The main advantage of trading using opposite Cartier Resources and Galway Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cartier Resources position performs unexpectedly, Galway Metals 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 Galway Metals will offset losses from the drop in Galway Metals' long position.| Cartier Resources vs. First Majestic Silver | Cartier Resources vs. Ivanhoe Energy | Cartier Resources vs. Orezone Gold Corp | Cartier Resources vs. Faraday Copper Corp |
| Galway Metals vs. First Majestic Silver | Galway Metals vs. Ivanhoe Energy | Galway Metals vs. Orezone Gold Corp | Galway Metals vs. Faraday Copper 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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