Correlation Between Prime Meridian and Benton Resources
Can any of the company-specific risk be diversified away by investing in both Prime Meridian and Benton 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 Prime Meridian and Benton Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Meridian Resources and Benton Resources, you can compare the effects of market volatilities on Prime Meridian and Benton 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 Prime Meridian with a short position of Benton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Meridian and Benton Resources.
Diversification Opportunities for Prime Meridian and Benton Resources
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prime and Benton is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Prime Meridian Resources and Benton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benton Resources and Prime Meridian 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 Prime Meridian Resources are associated (or correlated) with Benton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benton Resources has no effect on the direction of Prime Meridian i.e., Prime Meridian and Benton Resources go up and down completely randomly.
Pair Corralation between Prime Meridian and Benton Resources
Assuming the 90 days horizon Prime Meridian Resources is expected to under-perform the Benton Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Prime Meridian Resources is 1.69 times less risky than Benton Resources. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Benton Resources is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 7.10 in Benton Resources on September 1, 2024 and sell it today you would lose (2.10) from holding Benton Resources or give up 29.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Meridian Resources vs. Benton Resources
Performance |
| Timeline |
| Prime Meridian Resources |
| Benton Resources |
Prime Meridian and Benton Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Meridian and Benton Resources
The main advantage of trading using opposite Prime Meridian and Benton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Meridian position performs unexpectedly, Benton 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 Benton Resources will offset losses from the drop in Benton Resources' long position.| Prime Meridian vs. Macmahon Holdings Limited | Prime Meridian vs. Rokmaster Resources Corp | Prime Meridian vs. Hudson Resources | Prime Meridian vs. Thunder Gold Corp |
| Benton Resources vs. Aurelia Metals Limited | Benton Resources vs. Artemis Resources | Benton Resources vs. Ascendant Resources | Benton Resources vs. Altiplano Metals |
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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