Correlation Between Mainstreet Equity and Laramide Resources
Can any of the company-specific risk be diversified away by investing in both Mainstreet Equity and Laramide 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 Mainstreet Equity and Laramide Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mainstreet Equity Corp and Laramide Resources, you can compare the effects of market volatilities on Mainstreet Equity and Laramide 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 Mainstreet Equity with a short position of Laramide Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mainstreet Equity and Laramide Resources.
Diversification Opportunities for Mainstreet Equity and Laramide Resources
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mainstreet and Laramide is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Mainstreet Equity Corp and Laramide Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laramide Resources and Mainstreet Equity 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 Mainstreet Equity Corp are associated (or correlated) with Laramide Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laramide Resources has no effect on the direction of Mainstreet Equity i.e., Mainstreet Equity and Laramide Resources go up and down completely randomly.
Pair Corralation between Mainstreet Equity and Laramide Resources
Assuming the 90 days trading horizon Mainstreet Equity is expected to generate 2.06 times less return on investment than Laramide Resources. But when comparing it to its historical volatility, Mainstreet Equity Corp is 3.45 times less risky than Laramide Resources. It trades about 0.09 of its potential returns per unit of risk. Laramide Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Laramide Resources on August 31, 2024 and sell it today you would earn a total of 29.00 from holding Laramide Resources or generate 67.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Mainstreet Equity Corp vs. Laramide Resources
Performance |
| Timeline |
| Mainstreet Equity Corp |
| Laramide Resources |
Mainstreet Equity and Laramide Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mainstreet Equity and Laramide Resources
The main advantage of trading using opposite Mainstreet Equity and Laramide Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mainstreet Equity position performs unexpectedly, Laramide 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 Laramide Resources will offset losses from the drop in Laramide Resources' long position.| Mainstreet Equity vs. Morguard | Mainstreet Equity vs. Melcor Developments | Mainstreet Equity vs. Boardwalk Real Estate | Mainstreet Equity vs. Genesis Land Development |
| Laramide Resources vs. Mega Uranium | Laramide Resources vs. Forsys Metals Corp | Laramide Resources vs. Pinetree Capital | Laramide Resources vs. Ur Energy |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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