Correlation Between Supremex and Royal Canadian
Can any of the company-specific risk be diversified away by investing in both Supremex and Royal Canadian 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 Supremex and Royal Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supremex and Royal Canadian Mint, you can compare the effects of market volatilities on Supremex and Royal Canadian 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 Supremex with a short position of Royal Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supremex and Royal Canadian.
Diversification Opportunities for Supremex and Royal Canadian
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Supremex and Royal is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Supremex and Royal Canadian Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Canadian Mint and Supremex 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 Supremex are associated (or correlated) with Royal Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Canadian Mint has no effect on the direction of Supremex i.e., Supremex and Royal Canadian go up and down completely randomly.
Pair Corralation between Supremex and Royal Canadian
Assuming the 90 days trading horizon Supremex is expected to generate 1.27 times more return on investment than Royal Canadian. However, Supremex is 1.27 times more volatile than Royal Canadian Mint. It trades about 0.05 of its potential returns per unit of risk. Royal Canadian Mint is currently generating about 0.02 per unit of risk. If you would invest 367.00 in Supremex on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Supremex or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supremex vs. Royal Canadian Mint
Performance |
| Timeline |
| Supremex |
| Royal Canadian Mint |
Supremex and Royal Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supremex and Royal Canadian
The main advantage of trading using opposite Supremex and Royal Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supremex position performs unexpectedly, Royal Canadian 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 Royal Canadian will offset losses from the drop in Royal Canadian's long position.| Supremex vs. High Liner Foods | Supremex vs. Tree Island Steel | Supremex vs. Chesswood Group Limited | Supremex vs. Hammond Power Solutions |
| Royal Canadian vs. Royal Canadian Mint | Royal Canadian vs. Sprott Physical Silver | Royal Canadian vs. iShares Silver Bullion | Royal Canadian vs. Sprott Physical Gold |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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