Correlation Between Major Drilling and New Destiny
Can any of the company-specific risk be diversified away by investing in both Major Drilling and New Destiny 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 New Destiny 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 New Destiny Mining, you can compare the effects of market volatilities on Major Drilling and New Destiny 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 New Destiny. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and New Destiny.
Diversification Opportunities for Major Drilling and New Destiny
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Major and New is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and New Destiny Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Destiny Mining 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 New Destiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Destiny Mining has no effect on the direction of Major Drilling i.e., Major Drilling and New Destiny go up and down completely randomly.
Pair Corralation between Major Drilling and New Destiny
Assuming the 90 days trading horizon Major Drilling Group is expected to generate 0.34 times more return on investment than New Destiny. However, Major Drilling Group is 2.94 times less risky than New Destiny. It trades about 0.04 of its potential returns per unit of risk. New Destiny Mining is currently generating about -0.3 per unit of risk. If you would invest 867.00 in Major Drilling Group on August 26, 2024 and sell it today you would earn a total of 12.00 from holding Major Drilling Group or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. New Destiny Mining
Performance |
| Timeline |
| Major Drilling Group |
| New Destiny Mining |
Major Drilling and New Destiny Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and New Destiny
The main advantage of trading using opposite Major Drilling and New Destiny positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, New Destiny 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 New Destiny will offset losses from the drop in New Destiny's long position.| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
| New Destiny vs. T2 Metals Corp | New Destiny vs. Endeavour Silver Corp | New Destiny vs. Major Drilling Group | New Destiny vs. Vizsla Silver Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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