Correlation Between Magna Terra and CANEX Metals
Can any of the company-specific risk be diversified away by investing in both Magna Terra and CANEX Metals 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 Magna Terra and CANEX Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna Terra Minerals and CANEX Metals, you can compare the effects of market volatilities on Magna Terra and CANEX Metals 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 Magna Terra with a short position of CANEX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna Terra and CANEX Metals.
Diversification Opportunities for Magna Terra and CANEX Metals
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Magna and CANEX is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Magna Terra Minerals and CANEX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANEX Metals and Magna Terra 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 Magna Terra Minerals are associated (or correlated) with CANEX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANEX Metals has no effect on the direction of Magna Terra i.e., Magna Terra and CANEX Metals go up and down completely randomly.
Pair Corralation between Magna Terra and CANEX Metals
Assuming the 90 days horizon Magna Terra Minerals is expected to generate 1.58 times more return on investment than CANEX Metals. However, Magna Terra is 1.58 times more volatile than CANEX Metals. It trades about 0.06 of its potential returns per unit of risk. CANEX Metals is currently generating about 0.03 per unit of risk. If you would invest 5.00 in Magna Terra Minerals on August 30, 2024 and sell it today you would lose (3.00) from holding Magna Terra Minerals or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna Terra Minerals vs. CANEX Metals
Performance |
| Timeline |
| Magna Terra Minerals |
| CANEX Metals |
Magna Terra and CANEX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna Terra and CANEX Metals
The main advantage of trading using opposite Magna Terra and CANEX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna Terra position performs unexpectedly, CANEX Metals 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 CANEX Metals will offset losses from the drop in CANEX Metals' long position.| Magna Terra vs. First Majestic Silver | Magna Terra vs. Ivanhoe Energy | Magna Terra vs. Orezone Gold Corp | Magna Terra vs. Faraday Copper Corp |
| CANEX Metals vs. Magna Terra Minerals | CANEX Metals vs. Golden Pursuit Resources | CANEX Metals vs. Wildsky Resources | CANEX Metals vs. Inventus Mining 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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