Correlation Between Red Pine and Matador Mining
Can any of the company-specific risk be diversified away by investing in both Red Pine and Matador 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 Matador 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 Matador Mining Limited, you can compare the effects of market volatilities on Red Pine and Matador 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 Matador Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Matador Mining.
Diversification Opportunities for Red Pine and Matador Mining
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Matador is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Matador Mining Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matador Mining 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 Matador Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matador Mining has no effect on the direction of Red Pine i.e., Red Pine and Matador Mining go up and down completely randomly.
Pair Corralation between Red Pine and Matador Mining
Assuming the 90 days horizon Red Pine is expected to generate 25.0 times less return on investment than Matador Mining. But when comparing it to its historical volatility, Red Pine Exploration is 2.82 times less risky than Matador Mining. It trades about 0.01 of its potential returns per unit of risk. Matador Mining Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2.80 in Matador Mining Limited on August 29, 2024 and sell it today you would earn a total of 3.68 from holding Matador Mining Limited or generate 131.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 63.16% |
| Values | Daily Returns |
Red Pine Exploration vs. Matador Mining Limited
Performance |
| Timeline |
| Red Pine Exploration |
| Matador Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Red Pine and Matador Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and Matador Mining
The main advantage of trading using opposite Red Pine and Matador Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, Matador 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 Matador Mining will offset losses from the drop in Matador Mining's long position.| Red Pine vs. Silver Hammer Mining | Red Pine vs. Reyna Silver Corp | Red Pine vs. Guanajuato Silver | Red Pine vs. Silver One Resources |
| Matador Mining vs. Rio2 Limited | Matador Mining vs. Aurion Resources | Matador Mining vs. Norsemont Mining | Matador Mining vs. Minaurum Gold |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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