Correlation Between Edison Cobalt and Kraken Energy
Can any of the company-specific risk be diversified away by investing in both Edison Cobalt and Kraken Energy 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 Edison Cobalt and Kraken Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edison Cobalt Corp and Kraken Energy Corp, you can compare the effects of market volatilities on Edison Cobalt and Kraken Energy 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 Edison Cobalt with a short position of Kraken Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edison Cobalt and Kraken Energy.
Diversification Opportunities for Edison Cobalt and Kraken Energy
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Edison and Kraken is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Edison Cobalt Corp and Kraken Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Energy Corp and Edison Cobalt 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 Edison Cobalt Corp are associated (or correlated) with Kraken Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Energy Corp has no effect on the direction of Edison Cobalt i.e., Edison Cobalt and Kraken Energy go up and down completely randomly.
Pair Corralation between Edison Cobalt and Kraken Energy
Assuming the 90 days horizon Edison Cobalt Corp is expected to under-perform the Kraken Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Edison Cobalt Corp is 1.1 times less risky than Kraken Energy. The pink sheet trades about -0.21 of its potential returns per unit of risk. The Kraken Energy Corp is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 3.55 in Kraken Energy Corp on September 4, 2024 and sell it today you would lose (0.91) from holding Kraken Energy Corp or give up 25.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edison Cobalt Corp vs. Kraken Energy Corp
Performance |
| Timeline |
| Edison Cobalt Corp |
| Kraken Energy Corp |
Edison Cobalt and Kraken Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edison Cobalt and Kraken Energy
The main advantage of trading using opposite Edison Cobalt and Kraken Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edison Cobalt position performs unexpectedly, Kraken Energy 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 Kraken Energy will offset losses from the drop in Kraken Energy's long position.| Edison Cobalt vs. Baroyeca Gold Silver | Edison Cobalt vs. Aurelia Metals Limited | Edison Cobalt vs. China Rare Earth | Edison Cobalt vs. Champion Bear Resources |
| Kraken Energy vs. Qubec Nickel Corp | Kraken Energy vs. IGO Limited | Kraken Energy vs. Avarone Metals | Kraken Energy vs. Adriatic Metals PLC |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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