Correlation Between Red Moon and Sherritt International
Can any of the company-specific risk be diversified away by investing in both Red Moon and Sherritt International 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 Moon and Sherritt International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Moon Resources and Sherritt International, you can compare the effects of market volatilities on Red Moon and Sherritt International 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 Moon with a short position of Sherritt International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Moon and Sherritt International.
Diversification Opportunities for Red Moon and Sherritt International
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Red and Sherritt is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Red Moon Resources and Sherritt International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherritt International and Red Moon 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 Moon Resources are associated (or correlated) with Sherritt International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherritt International has no effect on the direction of Red Moon i.e., Red Moon and Sherritt International go up and down completely randomly.
Pair Corralation between Red Moon and Sherritt International
Assuming the 90 days horizon Red Moon Resources is expected to generate 0.57 times more return on investment than Sherritt International. However, Red Moon Resources is 1.76 times less risky than Sherritt International. It trades about -0.22 of its potential returns per unit of risk. Sherritt International is currently generating about -0.16 per unit of risk. If you would invest 49.00 in Red Moon Resources on August 26, 2024 and sell it today you would lose (5.00) from holding Red Moon Resources or give up 10.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Moon Resources vs. Sherritt International
Performance |
| Timeline |
| Red Moon Resources |
| Sherritt International |
Red Moon and Sherritt International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Moon and Sherritt International
The main advantage of trading using opposite Red Moon and Sherritt International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Moon position performs unexpectedly, Sherritt International 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 Sherritt International will offset losses from the drop in Sherritt International's long position.| Red Moon vs. Aurwest Resources | Red Moon vs. Benton Resources | Red Moon vs. Pan Global Resources | Red Moon vs. Tower Resources |
| Sherritt International vs. Ascendant Resources | Sherritt International vs. Cantex Mine Development | Sherritt International vs. Amarc Resources | Sherritt International vs. Sterling Metals 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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