Correlation Between Linamar and ValOre Metals
Can any of the company-specific risk be diversified away by investing in both Linamar 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 Linamar and ValOre Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Linamar and ValOre Metals Corp, you can compare the effects of market volatilities on Linamar 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 Linamar with a short position of ValOre Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linamar and ValOre Metals.
Diversification Opportunities for Linamar and ValOre Metals
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Linamar and ValOre is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Linamar 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 Linamar 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 Linamar 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 Linamar i.e., Linamar and ValOre Metals go up and down completely randomly.
Pair Corralation between Linamar and ValOre Metals
Assuming the 90 days trading horizon Linamar is expected to generate 0.29 times more return on investment than ValOre Metals. However, Linamar is 3.43 times less risky than ValOre Metals. It trades about -0.2 of its potential returns per unit of risk. ValOre Metals Corp is currently generating about -0.06 per unit of risk. If you would invest 5,781 in Linamar on November 18, 2024 and sell it today you would lose (484.00) from holding Linamar or give up 8.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linamar vs. ValOre Metals Corp
Performance |
| Timeline |
| Linamar |
| ValOre Metals Corp |
Linamar and ValOre Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linamar and ValOre Metals
The main advantage of trading using opposite Linamar and ValOre Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linamar 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.| Linamar vs. Martinrea International | Linamar vs. Magna International | Linamar vs. CCL Industries | Linamar vs. Stella Jones |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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