Correlation Between US Financial and Conquest Resources
Can any of the company-specific risk be diversified away by investing in both US Financial and Conquest 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 US Financial and Conquest Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Financial 15 and Conquest Resources, you can compare the effects of market volatilities on US Financial and Conquest 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 US Financial with a short position of Conquest Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Financial and Conquest Resources.
Diversification Opportunities for US Financial and Conquest Resources
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FTU-PB and Conquest is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding US Financial 15 and Conquest Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conquest Resources and US Financial 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 US Financial 15 are associated (or correlated) with Conquest Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conquest Resources has no effect on the direction of US Financial i.e., US Financial and Conquest Resources go up and down completely randomly.
Pair Corralation between US Financial and Conquest Resources
Assuming the 90 days trading horizon US Financial is expected to generate 6.43 times less return on investment than Conquest Resources. But when comparing it to its historical volatility, US Financial 15 is 6.48 times less risky than Conquest Resources. It trades about 0.05 of its potential returns per unit of risk. Conquest Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2.00 in Conquest Resources on September 15, 2024 and sell it today you would earn a total of 0.00 from holding Conquest Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Financial 15 vs. Conquest Resources
Performance |
| Timeline |
| US Financial 15 |
| Conquest Resources |
US Financial and Conquest Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Financial and Conquest Resources
The main advantage of trading using opposite US Financial and Conquest Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Financial position performs unexpectedly, Conquest 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 Conquest Resources will offset losses from the drop in Conquest Resources' long position.| US Financial vs. Brookfield Infrastructure Partners | US Financial vs. Brookfield Infrastructure Partners | US Financial vs. iShares Canadian HYBrid | US Financial vs. Solar Alliance Energy |
| Conquest Resources vs. Mako Mining Corp | Conquest Resources vs. US Financial 15 | Conquest Resources vs. Falcon Energy Materials | Conquest Resources vs. Arbor 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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