Correlation Between Red Pine and First Mining
Can any of the company-specific risk be diversified away by investing in both Red Pine and First Mining 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 First Mining 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 First Mining Gold, you can compare the effects of market volatilities on Red Pine and First Mining 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 First Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and First Mining.
Diversification Opportunities for Red Pine and First Mining
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Red and First is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and First Mining Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Mining Gold 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 First Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Mining Gold has no effect on the direction of Red Pine i.e., Red Pine and First Mining go up and down completely randomly.
Pair Corralation between Red Pine and First Mining
Assuming the 90 days horizon Red Pine Exploration is expected to generate 2.06 times more return on investment than First Mining. However, Red Pine is 2.06 times more volatile than First Mining Gold. It trades about 0.12 of its potential returns per unit of risk. First Mining Gold is currently generating about 0.11 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. First Mining Gold
Performance |
| Timeline |
| Red Pine Exploration |
| First Mining Gold |
Red Pine and First Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and First Mining
The main advantage of trading using opposite Red Pine and First Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, First Mining 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 First Mining will offset losses from the drop in First Mining'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 |
| First Mining vs. Aurion Resources | First Mining vs. Orezone Gold Corp | First Mining vs. Rio2 Limited | First Mining vs. Norsemont 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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