Correlation Between Scotch Creek and Ascendant Resources
Can any of the company-specific risk be diversified away by investing in both Scotch Creek and Ascendant Resources 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 Scotch Creek and Ascendant Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scotch Creek Ventures and Ascendant Resources, you can compare the effects of market volatilities on Scotch Creek and Ascendant Resources 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 Scotch Creek with a short position of Ascendant Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotch Creek and Ascendant Resources.
Diversification Opportunities for Scotch Creek and Ascendant Resources
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scotch and Ascendant is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Scotch Creek Ventures and Ascendant Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendant Resources and Scotch Creek 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 Scotch Creek Ventures are associated (or correlated) with Ascendant Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendant Resources has no effect on the direction of Scotch Creek i.e., Scotch Creek and Ascendant Resources go up and down completely randomly.
Pair Corralation between Scotch Creek and Ascendant Resources
Assuming the 90 days horizon Scotch Creek Ventures is expected to under-perform the Ascendant Resources. In addition to that, Scotch Creek is 1.2 times more volatile than Ascendant Resources. It trades about -0.04 of its total potential returns per unit of risk. Ascendant Resources is currently generating about 0.03 per unit of volatility. If you would invest 4.00 in Ascendant Resources on September 3, 2024 and sell it today you would lose (1.00) from holding Ascendant Resources or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scotch Creek Ventures vs. Ascendant Resources
Performance |
| Timeline |
| Scotch Creek Ventures |
| Ascendant Resources |
Scotch Creek and Ascendant Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scotch Creek and Ascendant Resources
The main advantage of trading using opposite Scotch Creek and Ascendant Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotch Creek position performs unexpectedly, Ascendant Resources 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 Ascendant Resources will offset losses from the drop in Ascendant Resources' long position.| Scotch Creek vs. Qubec Nickel Corp | Scotch Creek vs. IGO Limited | Scotch Creek vs. Avarone Metals | Scotch Creek vs. Adriatic Metals PLC |
| Ascendant Resources vs. Edison Cobalt Corp | Ascendant Resources vs. Champion Bear Resources | Ascendant Resources vs. Avarone Metals | Ascendant Resources vs. Adriatic Metals PLC |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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