Correlation Between Precision Drilling and Mako Mining
Can any of the company-specific risk be diversified away by investing in both Precision Drilling and Mako Mining 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 Precision Drilling and Mako Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Mako Mining Corp, you can compare the effects of market volatilities on Precision Drilling and Mako Mining 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 Precision Drilling with a short position of Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Mako Mining.
Diversification Opportunities for Precision Drilling and Mako Mining
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Precision and Mako is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp and Precision 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 Precision Drilling are associated (or correlated) with Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Precision Drilling i.e., Precision Drilling and Mako Mining go up and down completely randomly.
Pair Corralation between Precision Drilling and Mako Mining
Assuming the 90 days horizon Precision Drilling is expected to generate 0.96 times more return on investment than Mako Mining. However, Precision Drilling is 1.04 times less risky than Mako Mining. It trades about 0.19 of its potential returns per unit of risk. Mako Mining Corp is currently generating about -0.07 per unit of risk. If you would invest 7,950 in Precision Drilling on August 30, 2024 and sell it today you would earn a total of 811.00 from holding Precision Drilling or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precision Drilling vs. Mako Mining Corp
Performance |
| Timeline |
| Precision Drilling |
| Mako Mining Corp |
Precision Drilling and Mako Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Mako Mining
The main advantage of trading using opposite Precision Drilling and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling position performs unexpectedly, Mako Mining 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 Mako Mining will offset losses from the drop in Mako Mining's long position.| Precision Drilling vs. Trican Well Service | Precision Drilling vs. Ensign Energy Services | Precision Drilling vs. Calfrac Well Services | Precision Drilling vs. Birchcliff Energy |
| Mako Mining vs. Thor Explorations | Mako Mining vs. K2 Gold | Mako Mining vs. Loncor Resources | Mako Mining vs. Sarama Resource |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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