Correlation Between Greenland Resources and Extendicare
Can any of the company-specific risk be diversified away by investing in both Greenland Resources and Extendicare 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 Greenland Resources and Extendicare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greenland Resources and Extendicare, you can compare the effects of market volatilities on Greenland Resources and Extendicare 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 Greenland Resources with a short position of Extendicare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenland Resources and Extendicare.
Diversification Opportunities for Greenland Resources and Extendicare
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Greenland and Extendicare is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Greenland Resources and Extendicare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extendicare and Greenland Resources 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 Greenland Resources are associated (or correlated) with Extendicare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extendicare has no effect on the direction of Greenland Resources i.e., Greenland Resources and Extendicare go up and down completely randomly.
Pair Corralation between Greenland Resources and Extendicare
Assuming the 90 days trading horizon Greenland Resources is expected to generate 6.37 times less return on investment than Extendicare. In addition to that, Greenland Resources is 2.19 times more volatile than Extendicare. It trades about 0.01 of its total potential returns per unit of risk. Extendicare is currently generating about 0.15 per unit of volatility. If you would invest 241.00 in Extendicare on November 2, 2024 and sell it today you would earn a total of 802.00 from holding Extendicare or generate 332.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greenland Resources vs. Extendicare
Performance |
| Timeline |
| Greenland Resources |
| Extendicare |
Greenland Resources and Extendicare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greenland Resources and Extendicare
The main advantage of trading using opposite Greenland Resources and Extendicare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenland Resources position performs unexpectedly, Extendicare 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 Extendicare will offset losses from the drop in Extendicare's long position.| Greenland Resources vs. Postmedia Network Canada | Greenland Resources vs. Verizon Communications CDR | Greenland Resources vs. DIRTT Environmental Solutions | Greenland Resources vs. Labrador Iron Ore |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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