Correlation Between Red Cat and Brookmount Explorations
Can any of the company-specific risk be diversified away by investing in both Red Cat and Brookmount Explorations 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 Red Cat and Brookmount Explorations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Brookmount Explorations, you can compare the effects of market volatilities on Red Cat and Brookmount Explorations 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 Red Cat with a short position of Brookmount Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Brookmount Explorations.
Diversification Opportunities for Red Cat and Brookmount Explorations
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Brookmount is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Brookmount Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookmount Explorations and Red Cat 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 Red Cat Holdings are associated (or correlated) with Brookmount Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookmount Explorations has no effect on the direction of Red Cat i.e., Red Cat and Brookmount Explorations go up and down completely randomly.
Pair Corralation between Red Cat and Brookmount Explorations
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 0.57 times more return on investment than Brookmount Explorations. However, Red Cat Holdings is 1.75 times less risky than Brookmount Explorations. It trades about 0.15 of its potential returns per unit of risk. Brookmount Explorations is currently generating about 0.07 per unit of risk. If you would invest 88.00 in Red Cat Holdings on August 26, 2024 and sell it today you would earn a total of 642.00 from holding Red Cat Holdings or generate 729.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Brookmount Explorations
Performance |
| Timeline |
| Red Cat Holdings |
| Brookmount Explorations |
Red Cat and Brookmount Explorations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Brookmount Explorations
The main advantage of trading using opposite Red Cat and Brookmount Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Brookmount Explorations 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 Brookmount Explorations will offset losses from the drop in Brookmount Explorations' long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Brookmount Explorations vs. Aurion Resources | Brookmount Explorations vs. Liberty Gold Corp | Brookmount Explorations vs. Orezone Gold Corp | Brookmount Explorations vs. Radisson Mining Resources |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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