Correlation Between IMetal Resources and Stroud Resources
Can any of the company-specific risk be diversified away by investing in both IMetal Resources and Stroud 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 IMetal Resources and Stroud Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iMetal Resources and Stroud Resources, you can compare the effects of market volatilities on IMetal Resources and Stroud 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 IMetal Resources with a short position of Stroud Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMetal Resources and Stroud Resources.
Diversification Opportunities for IMetal Resources and Stroud Resources
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between IMetal and Stroud is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding iMetal Resources and Stroud Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stroud Resources and IMetal 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 iMetal Resources are associated (or correlated) with Stroud Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stroud Resources has no effect on the direction of IMetal Resources i.e., IMetal Resources and Stroud Resources go up and down completely randomly.
Pair Corralation between IMetal Resources and Stroud Resources
Assuming the 90 days horizon iMetal Resources is expected to under-perform the Stroud Resources. But the stock apears to be less risky and, when comparing its historical volatility, iMetal Resources is 2.63 times less risky than Stroud Resources. The stock trades about -0.02 of its potential returns per unit of risk. The Stroud Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10.00 in Stroud Resources on September 2, 2024 and sell it today you would lose (5.00) from holding Stroud Resources or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
iMetal Resources vs. Stroud Resources
Performance |
| Timeline |
| iMetal Resources |
| Stroud Resources |
IMetal Resources and Stroud Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMetal Resources and Stroud Resources
The main advantage of trading using opposite IMetal Resources and Stroud Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMetal Resources position performs unexpectedly, Stroud 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 Stroud Resources will offset losses from the drop in Stroud Resources' long position.| IMetal Resources vs. Verizon Communications CDR | IMetal Resources vs. Datable Technology Corp | IMetal Resources vs. CVW CleanTech | IMetal Resources vs. AGF Management Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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