Correlation Between Canada Rare and Strategic Metals
Can any of the company-specific risk be diversified away by investing in both Canada Rare and Strategic 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 Canada Rare and Strategic Metals 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 Strategic Metals, you can compare the effects of market volatilities on Canada Rare and Strategic 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 Canada Rare with a short position of Strategic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Rare and Strategic Metals.
Diversification Opportunities for Canada Rare and Strategic Metals
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canada and Strategic is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Canada Rare Earth and Strategic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Metals 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 Strategic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Metals has no effect on the direction of Canada Rare i.e., Canada Rare and Strategic Metals go up and down completely randomly.
Pair Corralation between Canada Rare and Strategic Metals
Assuming the 90 days horizon Canada Rare Earth is expected to generate 4.67 times more return on investment than Strategic Metals. However, Canada Rare is 4.67 times more volatile than Strategic Metals. It trades about 0.09 of its potential returns per unit of risk. Strategic Metals is currently generating about 0.01 per unit of risk. If you would invest 4.00 in Canada Rare Earth on November 27, 2024 and sell it today you would lose (3.00) from holding Canada Rare Earth or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canada Rare Earth vs. Strategic Metals
Performance |
| Timeline |
| Canada Rare Earth |
| Strategic Metals |
Canada Rare and Strategic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canada Rare and Strategic Metals
The main advantage of trading using opposite Canada Rare and Strategic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Rare position performs unexpectedly, Strategic 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 Strategic Metals will offset losses from the drop in Strategic Metals' long position.| Canada Rare vs. Commerce Resources Corp | Canada Rare vs. Medallion Resources | Canada Rare vs. Ucore Rare Metals | Canada Rare vs. Bravada Gold |
| Strategic Metals vs. Silver Spruce Resources | Strategic Metals vs. First American Silver | Strategic Metals vs. Horizonte Minerals Plc | Strategic Metals vs. Commerce Resources 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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