Correlation Between ExGen Resources and Canada Carbon
Can any of the company-specific risk be diversified away by investing in both ExGen Resources and Canada Carbon 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 ExGen Resources and Canada Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ExGen Resources and Canada Carbon, you can compare the effects of market volatilities on ExGen Resources and Canada Carbon 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 ExGen Resources with a short position of Canada Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ExGen Resources and Canada Carbon.
Diversification Opportunities for ExGen Resources and Canada Carbon
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ExGen and Canada is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ExGen Resources and Canada Carbon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canada Carbon and ExGen 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 ExGen Resources are associated (or correlated) with Canada Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canada Carbon has no effect on the direction of ExGen Resources i.e., ExGen Resources and Canada Carbon go up and down completely randomly.
Pair Corralation between ExGen Resources and Canada Carbon
Assuming the 90 days horizon ExGen Resources is expected to generate 1.76 times less return on investment than Canada Carbon. But when comparing it to its historical volatility, ExGen Resources is 1.41 times less risky than Canada Carbon. It trades about 0.05 of its potential returns per unit of risk. Canada Carbon is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Canada Carbon on November 28, 2024 and sell it today you would lose (4.00) from holding Canada Carbon or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ExGen Resources vs. Canada Carbon
Performance |
| Timeline |
| ExGen Resources |
| Canada Carbon |
ExGen Resources and Canada Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ExGen Resources and Canada Carbon
The main advantage of trading using opposite ExGen Resources and Canada Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ExGen Resources position performs unexpectedly, Canada Carbon 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 Canada Carbon will offset losses from the drop in Canada Carbon's long position.| ExGen Resources vs. Nicola Mining | ExGen Resources vs. Perseus Mining | ExGen Resources vs. NeXGold Mining Corp | ExGen Resources vs. Precision Drilling |
| Canada Carbon vs. Graphite One | Canada Carbon vs. ExGen Resources | Canada Carbon vs. Cariboo Rose Resources | Canada Carbon vs. Black Mammoth Metals |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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