Correlation Between Infinico Metals and Southern Empire
Can any of the company-specific risk be diversified away by investing in both Infinico Metals and Southern Empire 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 Infinico Metals and Southern Empire into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infinico Metals Corp and Southern Empire Resources, you can compare the effects of market volatilities on Infinico Metals and Southern Empire 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 Infinico Metals with a short position of Southern Empire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infinico Metals and Southern Empire.
Diversification Opportunities for Infinico Metals and Southern Empire
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Infinico and Southern is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Infinico Metals Corp and Southern Empire Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Empire Resources and Infinico Metals 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 Infinico Metals Corp are associated (or correlated) with Southern Empire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Empire Resources has no effect on the direction of Infinico Metals i.e., Infinico Metals and Southern Empire go up and down completely randomly.
Pair Corralation between Infinico Metals and Southern Empire
Assuming the 90 days trading horizon Infinico Metals Corp is expected to generate 1.55 times more return on investment than Southern Empire. However, Infinico Metals is 1.55 times more volatile than Southern Empire Resources. It trades about -0.17 of its potential returns per unit of risk. Southern Empire Resources is currently generating about -0.38 per unit of risk. If you would invest 3.00 in Infinico Metals Corp on August 29, 2024 and sell it today you would lose (1.00) from holding Infinico Metals Corp or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Infinico Metals Corp vs. Southern Empire Resources
Performance |
| Timeline |
| Infinico Metals Corp |
| Southern Empire Resources |
Infinico Metals and Southern Empire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infinico Metals and Southern Empire
The main advantage of trading using opposite Infinico Metals and Southern Empire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infinico Metals position performs unexpectedly, Southern Empire 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 Southern Empire will offset losses from the drop in Southern Empire's long position.The idea behind Infinico Metals Corp and Southern Empire Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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