Correlation Between Canada Rare and Champion Iron
Can any of the company-specific risk be diversified away by investing in both Canada Rare and Champion Iron 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 Canada Rare and Champion Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canada Rare Earth and Champion Iron, you can compare the effects of market volatilities on Canada Rare and Champion Iron 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 Canada Rare with a short position of Champion Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Rare and Champion Iron.
Diversification Opportunities for Canada Rare and Champion Iron
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Canada and Champion is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Canada Rare Earth and Champion Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champion Iron and Canada Rare 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 Canada Rare Earth are associated (or correlated) with Champion Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champion Iron has no effect on the direction of Canada Rare i.e., Canada Rare and Champion Iron go up and down completely randomly.
Pair Corralation between Canada Rare and Champion Iron
Given the investment horizon of 90 days Canada Rare Earth is expected to generate 5.66 times more return on investment than Champion Iron. However, Canada Rare is 5.66 times more volatile than Champion Iron. It trades about 0.06 of its potential returns per unit of risk. Champion Iron is currently generating about 0.0 per unit of risk. If you would invest 3.00 in Canada Rare Earth on September 2, 2024 and sell it today you would lose (1.50) from holding Canada Rare Earth or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canada Rare Earth vs. Champion Iron
Performance |
| Timeline |
| Canada Rare Earth |
| Champion Iron |
Canada Rare and Champion Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canada Rare and Champion Iron
The main advantage of trading using opposite Canada Rare and Champion Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Rare position performs unexpectedly, Champion Iron 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 Champion Iron will offset losses from the drop in Champion Iron's long position.| Canada Rare vs. Jamieson Wellness | Canada Rare vs. Mako Mining Corp | Canada Rare vs. WELL Health Technologies | Canada Rare vs. CVS HEALTH CDR |
| Champion Iron vs. Black Iron | Champion Iron vs. Wesdome Gold Mines | Champion Iron vs. GoGold Resources | Champion Iron vs. Mason Graphite |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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