Correlation Between Entree Resources and Topicus
Can any of the company-specific risk be diversified away by investing in both Entree Resources and Topicus 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 Topicus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entree Resources and Topicus, you can compare the effects of market volatilities on Entree Resources and Topicus 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 Topicus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entree Resources and Topicus.
Diversification Opportunities for Entree Resources and Topicus
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Entree and Topicus is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Entree Resources and Topicus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topicus 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 Topicus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topicus has no effect on the direction of Entree Resources i.e., Entree Resources and Topicus go up and down completely randomly.
Pair Corralation between Entree Resources and Topicus
Assuming the 90 days trading horizon Entree Resources is expected to generate 1.25 times more return on investment than Topicus. However, Entree Resources is 1.25 times more volatile than Topicus. It trades about 0.06 of its potential returns per unit of risk. Topicus is currently generating about 0.04 per unit of risk. If you would invest 130.00 in Entree Resources on August 29, 2024 and sell it today you would earn a total of 65.00 from holding Entree Resources or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entree Resources vs. Topicus
Performance |
| Timeline |
| Entree Resources |
| Topicus |
Entree Resources and Topicus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entree Resources and Topicus
The main advantage of trading using opposite Entree Resources and Topicus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entree Resources position performs unexpectedly, Topicus 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 Topicus will offset losses from the drop in Topicus' 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 |
| Topicus vs. Telus Corp | Topicus vs. Toronto Dominion Bank | Topicus vs. Manulife Financial Corp | Topicus vs. Canadian Natural Resources |
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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