Correlation Between E79 Resources and Western Resources
Can any of the company-specific risk be diversified away by investing in both E79 Resources and Western 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 E79 Resources and Western Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E79 Resources Corp and Western Resources Corp, you can compare the effects of market volatilities on E79 Resources and Western 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 E79 Resources with a short position of Western Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of E79 Resources and Western Resources.
Diversification Opportunities for E79 Resources and Western Resources
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between E79 and Western is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding E79 Resources Corp and Western Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Resources Corp and E79 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 E79 Resources Corp are associated (or correlated) with Western Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Resources Corp has no effect on the direction of E79 Resources i.e., E79 Resources and Western Resources go up and down completely randomly.
Pair Corralation between E79 Resources and Western Resources
Assuming the 90 days horizon E79 Resources Corp is expected to generate 101.12 times more return on investment than Western Resources. However, E79 Resources is 101.12 times more volatile than Western Resources Corp. It trades about 0.29 of its potential returns per unit of risk. Western Resources Corp is currently generating about -0.32 per unit of risk. If you would invest 10.00 in E79 Resources Corp on October 25, 2024 and sell it today you would earn a total of 7.00 from holding E79 Resources Corp or generate 70.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
E79 Resources Corp vs. Western Resources Corp
Performance |
| Timeline |
| E79 Resources Corp |
| Western Resources Corp |
E79 Resources and Western Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E79 Resources and Western Resources
The main advantage of trading using opposite E79 Resources and Western Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E79 Resources position performs unexpectedly, Western 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 Western Resources will offset losses from the drop in Western Resources' long position.| E79 Resources vs. Norra Metals Corp | E79 Resources vs. Voltage Metals Corp | E79 Resources vs. Cantex Mine Development | E79 Resources vs. Amarc Resources |
| Western Resources vs. Wolfden Resources | Western Resources vs. Newport Exploration | Western Resources vs. BeMetals Corp | Western Resources vs. Giyani 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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