Correlation Between Sage Potash and Uniteds
Can any of the company-specific risk be diversified away by investing in both Sage Potash and Uniteds 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 Uniteds 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 Uniteds Limited, you can compare the effects of market volatilities on Sage Potash and Uniteds 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 Uniteds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Potash and Uniteds.
Diversification Opportunities for Sage Potash and Uniteds
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sage and Uniteds is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sage Potash Corp and Uniteds Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uniteds Limited 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 Uniteds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uniteds Limited has no effect on the direction of Sage Potash i.e., Sage Potash and Uniteds go up and down completely randomly.
Pair Corralation between Sage Potash and Uniteds
Assuming the 90 days trading horizon Sage Potash Corp is expected to under-perform the Uniteds. In addition to that, Sage Potash is 9.9 times more volatile than Uniteds Limited. It trades about -0.04 of its total potential returns per unit of risk. Uniteds Limited is currently generating about 0.06 per unit of volatility. If you would invest 12,874 in Uniteds Limited on August 30, 2024 and sell it today you would earn a total of 144.00 from holding Uniteds Limited or generate 1.12% 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. Uniteds Limited
Performance |
| Timeline |
| Sage Potash Corp |
| Uniteds Limited |
Sage Potash and Uniteds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Potash and Uniteds
The main advantage of trading using opposite Sage Potash and Uniteds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Potash position performs unexpectedly, Uniteds 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 Uniteds will offset losses from the drop in Uniteds' 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 |
| Uniteds vs. Economic Investment Trust | Uniteds vs. Canadian General Investments | Uniteds vs. E L Financial Corp | Uniteds vs. Clairvest Group |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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