Correlation Between Trican Well and HudBay Minerals
Can any of the company-specific risk be diversified away by investing in both Trican Well and HudBay Minerals 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 Trican Well and HudBay Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trican Well Service and HudBay Minerals, you can compare the effects of market volatilities on Trican Well and HudBay Minerals 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 Trican Well with a short position of HudBay Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trican Well and HudBay Minerals.
Diversification Opportunities for Trican Well and HudBay Minerals
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Trican and HudBay is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Trican Well Service and HudBay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HudBay Minerals and Trican Well 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 Trican Well Service are associated (or correlated) with HudBay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HudBay Minerals has no effect on the direction of Trican Well i.e., Trican Well and HudBay Minerals go up and down completely randomly.
Pair Corralation between Trican Well and HudBay Minerals
Assuming the 90 days trading horizon Trican Well Service is expected to generate 0.54 times more return on investment than HudBay Minerals. However, Trican Well Service is 1.84 times less risky than HudBay Minerals. It trades about -0.1 of its potential returns per unit of risk. HudBay Minerals is currently generating about -0.16 per unit of risk. If you would invest 484.00 in Trican Well Service on November 28, 2024 and sell it today you would lose (25.00) from holding Trican Well Service or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trican Well Service vs. HudBay Minerals
Performance |
| Timeline |
| Trican Well Service |
| HudBay Minerals |
Trican Well and HudBay Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trican Well and HudBay Minerals
The main advantage of trading using opposite Trican Well and HudBay Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trican Well position performs unexpectedly, HudBay Minerals 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 HudBay Minerals will offset losses from the drop in HudBay Minerals' long position.| Trican Well vs. Calfrac Well Services | Trican Well vs. Precision Drilling | Trican Well vs. Ensign Energy Services | Trican Well vs. Birchcliff Energy |
| HudBay Minerals vs. Lundin Mining | HudBay Minerals vs. First Quantum Minerals | HudBay Minerals vs. Ivanhoe Mines | HudBay Minerals vs. Capstone Mining Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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