Correlation Between Sage Potash and Pason Systems
Can any of the company-specific risk be diversified away by investing in both Sage Potash and Pason Systems 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 Sage Potash and Pason Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Potash Corp and Pason Systems, you can compare the effects of market volatilities on Sage Potash and Pason Systems 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 Sage Potash with a short position of Pason Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Potash and Pason Systems.
Diversification Opportunities for Sage Potash and Pason Systems
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and Pason is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sage Potash Corp and Pason Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pason Systems and Sage Potash 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 Sage Potash Corp are associated (or correlated) with Pason Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pason Systems has no effect on the direction of Sage Potash i.e., Sage Potash and Pason Systems go up and down completely randomly.
Pair Corralation between Sage Potash and Pason Systems
Assuming the 90 days trading horizon Sage Potash Corp is expected to under-perform the Pason Systems. In addition to that, Sage Potash is 3.86 times more volatile than Pason Systems. It trades about -0.04 of its total potential returns per unit of risk. Pason Systems is currently generating about 0.11 per unit of volatility. If you would invest 1,361 in Pason Systems on August 30, 2024 and sell it today you would earn a total of 65.00 from holding Pason Systems or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Potash Corp vs. Pason Systems
Performance |
| Timeline |
| Sage Potash Corp |
| Pason Systems |
Sage Potash and Pason Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Potash and Pason Systems
The main advantage of trading using opposite Sage Potash and Pason Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Potash position performs unexpectedly, Pason Systems 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 Pason Systems will offset losses from the drop in Pason Systems' long position.| Sage Potash vs. Canadian Natural Resources | Sage Potash vs. Suncor Energy | Sage Potash vs. iShares Canadian HYBrid | Sage Potash vs. Altagas Cum Red |
| Pason Systems vs. Enerflex | Pason Systems vs. Mullen Group | Pason Systems vs. Secure Energy Services | Pason Systems vs. Ensign Energy Services |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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