Correlation Between Rare Element and Vale SA
Can any of the company-specific risk be diversified away by investing in both Rare Element and Vale SA 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 Rare Element and Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rare Element Resources and Vale SA ADR, you can compare the effects of market volatilities on Rare Element and Vale SA 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 Rare Element with a short position of Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rare Element and Vale SA.
Diversification Opportunities for Rare Element and Vale SA
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rare and Vale is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rare Element Resources and Vale SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA ADR and Rare Element 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 Rare Element Resources are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA ADR has no effect on the direction of Rare Element i.e., Rare Element and Vale SA go up and down completely randomly.
Pair Corralation between Rare Element and Vale SA
If you would invest 63.00 in Rare Element Resources on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Rare Element Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 0.79% |
| Values | Daily Returns |
Rare Element Resources vs. Vale SA ADR
Performance |
| Timeline |
| Rare Element Resources |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vale SA ADR |
Rare Element and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rare Element and Vale SA
The main advantage of trading using opposite Rare Element and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rare Element position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| Rare Element vs. Ucore Rare Metals | Rare Element vs. Lynas Rare Earths | Rare Element vs. Search Minerals | Rare Element vs. Arafura Resources |
| Vale SA vs. BHP Group Limited | Vale SA vs. Teck Resources Ltd | Vale SA vs. Lithium Americas Corp | Vale SA vs. MP Materials 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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