Correlation Between High Liner and ValOre Metals
Can any of the company-specific risk be diversified away by investing in both High Liner and ValOre Metals 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 High Liner and ValOre Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Liner Foods and ValOre Metals Corp, you can compare the effects of market volatilities on High Liner and ValOre Metals 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 High Liner with a short position of ValOre Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Liner and ValOre Metals.
Diversification Opportunities for High Liner and ValOre Metals
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between High and ValOre is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and ValOre Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ValOre Metals Corp and High Liner 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 High Liner Foods are associated (or correlated) with ValOre Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ValOre Metals Corp has no effect on the direction of High Liner i.e., High Liner and ValOre Metals go up and down completely randomly.
Pair Corralation between High Liner and ValOre Metals
Assuming the 90 days trading horizon High Liner is expected to generate 3.87 times less return on investment than ValOre Metals. But when comparing it to its historical volatility, High Liner Foods is 6.85 times less risky than ValOre Metals. It trades about 0.21 of its potential returns per unit of risk. ValOre Metals Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5.00 in ValOre Metals Corp on September 12, 2024 and sell it today you would earn a total of 3.00 from holding ValOre Metals Corp or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Liner Foods vs. ValOre Metals Corp
Performance |
| Timeline |
| High Liner Foods |
| ValOre Metals Corp |
High Liner and ValOre Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Liner and ValOre Metals
The main advantage of trading using opposite High Liner and ValOre Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner position performs unexpectedly, ValOre Metals 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 ValOre Metals will offset losses from the drop in ValOre Metals' long position.| High Liner vs. Leons Furniture Limited | High Liner vs. Autocanada | High Liner vs. Maple Leaf Foods | High Liner vs. Premium Brands Holdings |
| ValOre Metals vs. Enbridge Pref 5 | ValOre Metals vs. Enbridge Pref 11 | ValOre Metals vs. Enbridge Pref L | ValOre Metals vs. E Split 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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