Correlation Between Major Drilling and Sun Peak
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Sun Peak 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 Sun Peak 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 Sun Peak Metals, you can compare the effects of market volatilities on Major Drilling and Sun Peak 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 Sun Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Sun Peak.
Diversification Opportunities for Major Drilling and Sun Peak
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Major and Sun is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of Major Drilling i.e., Major Drilling and Sun Peak go up and down completely randomly.
Pair Corralation between Major Drilling and Sun Peak
Assuming the 90 days trading horizon Major Drilling Group is expected to generate 0.24 times more return on investment than Sun Peak. However, Major Drilling Group is 4.21 times less risky than Sun Peak. It trades about -0.1 of its potential returns per unit of risk. Sun Peak Metals is currently generating about -0.04 per unit of risk. If you would invest 877.00 in Major Drilling Group on October 11, 2024 and sell it today you would lose (23.00) from holding Major Drilling Group or give up 2.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Sun Peak Metals
Performance |
| Timeline |
| Major Drilling Group |
| Sun Peak Metals |
Major Drilling and Sun Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Sun Peak
The main advantage of trading using opposite Major Drilling and Sun Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Sun Peak 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 Sun Peak will offset losses from the drop in Sun Peak's long position.| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
| Sun Peak vs. SalesforceCom CDR | Sun Peak vs. Diversified Royalty Corp | Sun Peak vs. Economic Investment Trust | Sun Peak 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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