Correlation Between Red Pine and North Peak
Can any of the company-specific risk be diversified away by investing in both Red Pine and North Peak 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 Pine and North Peak into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Pine Exploration and North Peak Resources, you can compare the effects of market volatilities on Red Pine and North Peak 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 Pine with a short position of North Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and North Peak.
Diversification Opportunities for Red Pine and North Peak
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Red and North is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and North Peak Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Peak Resources and Red Pine 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 Pine Exploration are associated (or correlated) with North Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Peak Resources has no effect on the direction of Red Pine i.e., Red Pine and North Peak go up and down completely randomly.
Pair Corralation between Red Pine and North Peak
Assuming the 90 days horizon Red Pine Exploration is expected to generate 1.59 times more return on investment than North Peak. However, Red Pine is 1.59 times more volatile than North Peak Resources. It trades about 0.12 of its potential returns per unit of risk. North Peak Resources is currently generating about -0.19 per unit of risk. If you would invest 8.00 in Red Pine Exploration on November 27, 2024 and sell it today you would earn a total of 0.79 from holding Red Pine Exploration or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. North Peak Resources
Performance |
| Timeline |
| Red Pine Exploration |
| North Peak Resources |
Red Pine and North Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and North Peak
The main advantage of trading using opposite Red Pine and North Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, North Peak 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 North Peak will offset losses from the drop in North Peak's long position.| Red Pine vs. Endurance Gold | Red Pine vs. Altamira Gold Corp | Red Pine vs. Grande Portage Resources | Red Pine vs. Tectonic Metals |
| North Peak vs. Lavras Gold Corp | North Peak vs. TRU Precious Metals | North Peak vs. Orefinders Resources | North Peak vs. Nine Mile 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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