Correlation Between Emerita Resources and Magna Mining
Can any of the company-specific risk be diversified away by investing in both Emerita Resources and Magna Mining 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 Emerita Resources and Magna Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerita Resources Corp and Magna Mining, you can compare the effects of market volatilities on Emerita Resources and Magna Mining 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 Emerita Resources with a short position of Magna Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerita Resources and Magna Mining.
Diversification Opportunities for Emerita Resources and Magna Mining
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Emerita and Magna is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Emerita Resources Corp and Magna Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Mining and Emerita 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 Emerita Resources Corp are associated (or correlated) with Magna Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Mining has no effect on the direction of Emerita Resources i.e., Emerita Resources and Magna Mining go up and down completely randomly.
Pair Corralation between Emerita Resources and Magna Mining
Assuming the 90 days horizon Emerita Resources is expected to generate 9.84 times less return on investment than Magna Mining. But when comparing it to its historical volatility, Emerita Resources Corp is 1.13 times less risky than Magna Mining. It trades about 0.02 of its potential returns per unit of risk. Magna Mining is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Magna Mining on September 3, 2024 and sell it today you would earn a total of 66.00 from holding Magna Mining or generate 82.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerita Resources Corp vs. Magna Mining
Performance |
| Timeline |
| Emerita Resources Corp |
| Magna Mining |
Emerita Resources and Magna Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerita Resources and Magna Mining
The main advantage of trading using opposite Emerita Resources and Magna Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerita Resources position performs unexpectedly, Magna Mining 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 Magna Mining will offset losses from the drop in Magna Mining's long position.| Emerita Resources vs. Algoma Steel Group | Emerita Resources vs. Champion Iron | Emerita Resources vs. International Zeolite Corp | Emerita Resources vs. European Residential Real |
| Magna Mining vs. Brunswick Exploration | Magna Mining vs. Fireweed Zinc | Magna Mining vs. Emerita Resources Corp | Magna Mining vs. InZinc Mining |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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