Correlation Between Canada Rare and Defense Metals
Can any of the company-specific risk be diversified away by investing in both Canada Rare and Defense 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 Canada Rare and Defense Metals 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 Defense Metals Corp, you can compare the effects of market volatilities on Canada Rare and Defense 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 Canada Rare with a short position of Defense Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Rare and Defense Metals.
Diversification Opportunities for Canada Rare and Defense Metals
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canada and Defense is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Canada Rare Earth and Defense Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Defense Metals Corp 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 Defense Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Defense Metals Corp has no effect on the direction of Canada Rare i.e., Canada Rare and Defense Metals go up and down completely randomly.
Pair Corralation between Canada Rare and Defense Metals
Given the investment horizon of 90 days Canada Rare is expected to generate 2.23 times less return on investment than Defense Metals. In addition to that, Canada Rare is 2.59 times more volatile than Defense Metals Corp. It trades about 0.05 of its total potential returns per unit of risk. Defense Metals Corp is currently generating about 0.29 per unit of volatility. If you would invest 10.00 in Defense Metals Corp on September 25, 2024 and sell it today you would earn a total of 6.00 from holding Defense Metals Corp or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canada Rare Earth vs. Defense Metals Corp
Performance |
| Timeline |
| Canada Rare Earth |
| Defense Metals Corp |
Canada Rare and Defense Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canada Rare and Defense Metals
The main advantage of trading using opposite Canada Rare and Defense Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Rare position performs unexpectedly, Defense 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 Defense Metals will offset losses from the drop in Defense Metals' long position.| Canada Rare vs. Monarca Minerals | Canada Rare vs. Outcrop Gold Corp | Canada Rare vs. Grande Portage Resources | Canada Rare vs. Klondike Silver Corp |
| Defense Metals vs. Ucore Rare Metals | Defense Metals vs. Canada Rare Earth | Defense Metals vs. Stillwater Critical Minerals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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