Correlation Between Red Pine and Great Atlantic
Can any of the company-specific risk be diversified away by investing in both Red Pine and Great Atlantic 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 Great Atlantic 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 Great Atlantic Resources, you can compare the effects of market volatilities on Red Pine and Great Atlantic 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 Great Atlantic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and Great Atlantic.
Diversification Opportunities for Red Pine and Great Atlantic
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Red and Great is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and Great Atlantic Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Atlantic 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 Great Atlantic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Atlantic Resources has no effect on the direction of Red Pine i.e., Red Pine and Great Atlantic go up and down completely randomly.
Pair Corralation between Red Pine and Great Atlantic
Assuming the 90 days horizon Red Pine Exploration is expected to under-perform the Great Atlantic. But the stock apears to be less risky and, when comparing its historical volatility, Red Pine Exploration is 3.39 times less risky than Great Atlantic. The stock trades about -0.11 of its potential returns per unit of risk. The Great Atlantic Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Great Atlantic Resources on September 13, 2024 and sell it today you would lose (1.00) from holding Great Atlantic Resources or give up 14.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Pine Exploration vs. Great Atlantic Resources
Performance |
| Timeline |
| Red Pine Exploration |
| Great Atlantic Resources |
Red Pine and Great Atlantic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and Great Atlantic
The main advantage of trading using opposite Red Pine and Great Atlantic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, Great Atlantic 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 Great Atlantic will offset losses from the drop in Great Atlantic's long position.| Red Pine vs. Honey Badger Silver | Red Pine vs. Inventus Mining Corp | Red Pine vs. CANEX Metals | Red Pine vs. Ressources Minieres Radisson |
| Great Atlantic vs. Gossan Resources | Great Atlantic vs. Golden Ridge Resources | Great Atlantic vs. Jaxon Mining | Great Atlantic vs. Highway 50 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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