Correlation Between South Pacific and T2 Metals
Can any of the company-specific risk be diversified away by investing in both South Pacific and T2 Metals 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 South Pacific and T2 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Pacific Metals and T2 Metals Corp, you can compare the effects of market volatilities on South Pacific and T2 Metals 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 South Pacific with a short position of T2 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Pacific and T2 Metals.
Diversification Opportunities for South Pacific and T2 Metals
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between South and TWO is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding South Pacific Metals and T2 Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T2 Metals Corp and South Pacific 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 South Pacific Metals are associated (or correlated) with T2 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T2 Metals Corp has no effect on the direction of South Pacific i.e., South Pacific and T2 Metals go up and down completely randomly.
Pair Corralation between South Pacific and T2 Metals
Assuming the 90 days trading horizon South Pacific Metals is expected to generate 2.17 times more return on investment than T2 Metals. However, South Pacific is 2.17 times more volatile than T2 Metals Corp. It trades about 0.09 of its potential returns per unit of risk. T2 Metals Corp is currently generating about -0.2 per unit of risk. If you would invest 46.00 in South Pacific Metals on November 4, 2024 and sell it today you would earn a total of 3.00 from holding South Pacific Metals or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
South Pacific Metals vs. T2 Metals Corp
Performance |
| Timeline |
| South Pacific Metals |
| T2 Metals Corp |
South Pacific and T2 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Pacific and T2 Metals
The main advantage of trading using opposite South Pacific and T2 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Pacific position performs unexpectedly, T2 Metals 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 T2 Metals will offset losses from the drop in T2 Metals' long position.| South Pacific vs. Newmont Goldcorp Corp | South Pacific vs. Agnico Eagle Mines | South Pacific vs. Barrick Gold Corp | South Pacific vs. Wheaton Precious Metals |
| T2 Metals vs. IAMGold | T2 Metals vs. Eldorado Gold Corp | T2 Metals vs. Alamos Gold | T2 Metals vs. NovaGold Resources |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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