Correlation Between North American and Sun Peak
Can any of the company-specific risk be diversified away by investing in both North American and Sun Peak 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 North American and Sun Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Sun Peak Metals, you can compare the effects of market volatilities on North American and Sun Peak 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 North American with a short position of Sun Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Sun Peak.
Diversification Opportunities for North American and Sun Peak
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between North and Sun is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals and North American 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 North American Financial are associated (or correlated) with Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of North American i.e., North American and Sun Peak go up and down completely randomly.
Pair Corralation between North American and Sun Peak
Assuming the 90 days trading horizon North American Financial is expected to generate 0.33 times more return on investment than Sun Peak. However, North American Financial is 3.0 times less risky than Sun Peak. It trades about -0.09 of its potential returns per unit of risk. Sun Peak Metals is currently generating about -0.04 per unit of risk. If you would invest 719.00 in North American Financial on October 14, 2024 and sell it today you would lose (22.00) from holding North American Financial or give up 3.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Financial vs. Sun Peak Metals
Performance |
| Timeline |
| North American Financial |
| Sun Peak Metals |
North American and Sun Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Sun Peak
The main advantage of trading using opposite North American and Sun Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Sun Peak 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 Sun Peak will offset losses from the drop in Sun Peak's long position.| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
| Sun Peak vs. Ramp Metals | Sun Peak vs. Intact Financial Corp | Sun Peak vs. IGM Financial | Sun Peak vs. North American Financial |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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