Correlation Between Entree Resources and Platinum Group
Can any of the company-specific risk be diversified away by investing in both Entree Resources and Platinum Group 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 Entree Resources and Platinum Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entree Resources and Platinum Group Metals, you can compare the effects of market volatilities on Entree Resources and Platinum Group 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 Entree Resources with a short position of Platinum Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entree Resources and Platinum Group.
Diversification Opportunities for Entree Resources and Platinum Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entree and Platinum is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Entree Resources and Platinum Group Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Group Metals and Entree 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 Entree Resources are associated (or correlated) with Platinum Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Group Metals has no effect on the direction of Entree Resources i.e., Entree Resources and Platinum Group go up and down completely randomly.
Pair Corralation between Entree Resources and Platinum Group
Assuming the 90 days trading horizon Entree Resources is expected to generate 1.05 times more return on investment than Platinum Group. However, Entree Resources is 1.05 times more volatile than Platinum Group Metals. It trades about 0.0 of its potential returns per unit of risk. Platinum Group Metals is currently generating about -0.23 per unit of risk. If you would invest 199.00 in Entree Resources on August 28, 2024 and sell it today you would lose (4.00) from holding Entree Resources or give up 2.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entree Resources vs. Platinum Group Metals
Performance |
| Timeline |
| Entree Resources |
| Platinum Group Metals |
Entree Resources and Platinum Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entree Resources and Platinum Group
The main advantage of trading using opposite Entree Resources and Platinum Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entree Resources position performs unexpectedly, Platinum Group 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 Platinum Group will offset losses from the drop in Platinum Group's long position.| Entree Resources vs. First Majestic Silver | Entree Resources vs. Ivanhoe Energy | Entree Resources vs. Orezone Gold Corp | Entree Resources vs. Faraday Copper Corp |
| Platinum Group vs. Eastern Platinum Limited | Platinum Group vs. Entree Resources | Platinum Group vs. Solitario Exploration Royalty | Platinum Group vs. Minco Silver |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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