Correlation Between Canada Rare and Pegasus Resources
Can any of the company-specific risk be diversified away by investing in both Canada Rare and Pegasus 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 Canada Rare and Pegasus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canada Rare Earth and Pegasus Resources, you can compare the effects of market volatilities on Canada Rare and Pegasus 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 Canada Rare with a short position of Pegasus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Rare and Pegasus Resources.
Diversification Opportunities for Canada Rare and Pegasus Resources
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canada and Pegasus is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Canada Rare Earth and Pegasus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Resources and Canada Rare 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 Canada Rare Earth are associated (or correlated) with Pegasus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Resources has no effect on the direction of Canada Rare i.e., Canada Rare and Pegasus Resources go up and down completely randomly.
Pair Corralation between Canada Rare and Pegasus Resources
Assuming the 90 days horizon Canada Rare Earth is expected to under-perform the Pegasus Resources. But the pink sheet apears to be less risky and, when comparing its historical volatility, Canada Rare Earth is 2.09 times less risky than Pegasus Resources. The pink sheet trades about -0.24 of its potential returns per unit of risk. The Pegasus Resources is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 9.90 in Pegasus Resources on October 24, 2024 and sell it today you would lose (5.90) from holding Pegasus Resources or give up 59.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Canada Rare Earth vs. Pegasus Resources
Performance |
| Timeline |
| Canada Rare Earth |
| Pegasus Resources |
Canada Rare and Pegasus Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canada Rare and Pegasus Resources
The main advantage of trading using opposite Canada Rare and Pegasus Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Rare position performs unexpectedly, Pegasus 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 Pegasus Resources will offset losses from the drop in Pegasus Resources' long position.| Canada Rare vs. Commerce Resources Corp | Canada Rare vs. Medallion Resources | Canada Rare vs. Ucore Rare Metals | Canada Rare vs. Bravada Gold |
| Pegasus Resources vs. Chalice Mining Limited | Pegasus Resources vs. Niobay Metals | Pegasus Resources vs. Freegold Ventures Limited | Pegasus Resources vs. Wallbridge Mining |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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