Correlation Between Major Drilling and LithiumBank Resources
Can any of the company-specific risk be diversified away by investing in both Major Drilling and LithiumBank 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 Major Drilling and LithiumBank Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and LithiumBank Resources Corp, you can compare the effects of market volatilities on Major Drilling and LithiumBank 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 Major Drilling with a short position of LithiumBank Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and LithiumBank Resources.
Diversification Opportunities for Major Drilling and LithiumBank Resources
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Major and LithiumBank is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and LithiumBank Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LithiumBank Resources and Major Drilling 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 Major Drilling Group are associated (or correlated) with LithiumBank Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LithiumBank Resources has no effect on the direction of Major Drilling i.e., Major Drilling and LithiumBank Resources go up and down completely randomly.
Pair Corralation between Major Drilling and LithiumBank Resources
Assuming the 90 days trading horizon Major Drilling Group is expected to generate 0.32 times more return on investment than LithiumBank Resources. However, Major Drilling Group is 3.14 times less risky than LithiumBank Resources. It trades about 0.16 of its potential returns per unit of risk. LithiumBank Resources Corp is currently generating about 0.02 per unit of risk. If you would invest 828.00 in Major Drilling Group on September 14, 2024 and sell it today you would earn a total of 48.00 from holding Major Drilling Group or generate 5.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. LithiumBank Resources Corp
Performance |
| Timeline |
| Major Drilling Group |
| LithiumBank Resources |
Major Drilling and LithiumBank Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and LithiumBank Resources
The main advantage of trading using opposite Major Drilling and LithiumBank Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, LithiumBank 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 LithiumBank Resources will offset losses from the drop in LithiumBank Resources' long position.| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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