Correlation Between Rockridge Resources and Canadian Palladium
Can any of the company-specific risk be diversified away by investing in both Rockridge Resources and Canadian Palladium 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 Rockridge Resources and Canadian Palladium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockridge Resources and Canadian Palladium Resources, you can compare the effects of market volatilities on Rockridge Resources and Canadian Palladium 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 Rockridge Resources with a short position of Canadian Palladium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockridge Resources and Canadian Palladium.
Diversification Opportunities for Rockridge Resources and Canadian Palladium
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rockridge and Canadian is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Rockridge Resources and Canadian Palladium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Palladium and Rockridge Resources 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 Rockridge Resources are associated (or correlated) with Canadian Palladium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Palladium has no effect on the direction of Rockridge Resources i.e., Rockridge Resources and Canadian Palladium go up and down completely randomly.
Pair Corralation between Rockridge Resources and Canadian Palladium
Assuming the 90 days horizon Rockridge Resources is expected to generate 0.78 times more return on investment than Canadian Palladium. However, Rockridge Resources is 1.28 times less risky than Canadian Palladium. It trades about -0.09 of its potential returns per unit of risk. Canadian Palladium Resources is currently generating about -0.13 per unit of risk. If you would invest 1.43 in Rockridge Resources on September 1, 2024 and sell it today you would lose (0.33) from holding Rockridge Resources or give up 23.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rockridge Resources vs. Canadian Palladium Resources
Performance |
| Timeline |
| Rockridge Resources |
| Canadian Palladium |
Rockridge Resources and Canadian Palladium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockridge Resources and Canadian Palladium
The main advantage of trading using opposite Rockridge Resources and Canadian Palladium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockridge Resources position performs unexpectedly, Canadian Palladium 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 Canadian Palladium will offset losses from the drop in Canadian Palladium's long position.| Rockridge Resources vs. ATT Inc | Rockridge Resources vs. Merck Company | Rockridge Resources vs. Walt Disney | Rockridge Resources vs. Caterpillar |
| Canadian Palladium vs. ATT Inc | Canadian Palladium vs. Merck Company | Canadian Palladium vs. Walt Disney | Canadian Palladium vs. Caterpillar |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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