Correlation Between Red Pine and New Destiny
Can any of the company-specific risk be diversified away by investing in both Red Pine and New Destiny 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 New Destiny 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 New Destiny Mining, you can compare the effects of market volatilities on Red Pine and New Destiny 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 New Destiny. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Pine and New Destiny.
Diversification Opportunities for Red Pine and New Destiny
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Red and New is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Red Pine Exploration and New Destiny Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Destiny 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 New Destiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Destiny Mining has no effect on the direction of Red Pine i.e., Red Pine and New Destiny go up and down completely randomly.
Pair Corralation between Red Pine and New Destiny
Assuming the 90 days horizon Red Pine is expected to generate 3.18 times less return on investment than New Destiny. But when comparing it to its historical volatility, Red Pine Exploration is 1.28 times less risky than New Destiny. It trades about 0.02 of its potential returns per unit of risk. New Destiny Mining is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.00 in New Destiny Mining on September 12, 2024 and sell it today you would earn a total of 0.00 from holding New Destiny Mining or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Red Pine Exploration vs. New Destiny Mining
Performance |
| Timeline |
| Red Pine Exploration |
| New Destiny Mining |
Red Pine and New Destiny Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Pine and New Destiny
The main advantage of trading using opposite Red Pine and New Destiny positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Pine position performs unexpectedly, New Destiny 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 New Destiny will offset losses from the drop in New Destiny'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 |
| New Destiny vs. Ressources Minieres Radisson | New Destiny vs. Galantas Gold Corp | New Destiny vs. Red Pine Exploration | New Destiny vs. Kore 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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