Correlation Between True North and Mako Mining
Can any of the company-specific risk be diversified away by investing in both True North and Mako Mining 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 True North and Mako Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between True North Gems and Mako Mining Corp, you can compare the effects of market volatilities on True North and Mako Mining 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 True North with a short position of Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of True North and Mako Mining.
Diversification Opportunities for True North and Mako Mining
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between True and Mako is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding True North Gems and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp and True North 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 True North Gems are associated (or correlated) with Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of True North i.e., True North and Mako Mining go up and down completely randomly.
Pair Corralation between True North and Mako Mining
Assuming the 90 days horizon True North Gems is expected to generate 2.16 times more return on investment than Mako Mining. However, True North is 2.16 times more volatile than Mako Mining Corp. It trades about 0.03 of its potential returns per unit of risk. Mako Mining Corp is currently generating about 0.06 per unit of risk. If you would invest 6.00 in True North Gems on September 13, 2024 and sell it today you would lose (2.50) from holding True North Gems or give up 41.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
True North Gems vs. Mako Mining Corp
Performance |
| Timeline |
| True North Gems |
| Mako Mining Corp |
True North and Mako Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with True North and Mako Mining
The main advantage of trading using opposite True North and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True North position performs unexpectedly, Mako Mining 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 Mako Mining will offset losses from the drop in Mako Mining's long position.| True North vs. Mako Mining Corp | True North vs. Bird Construction | True North vs. Falcon Energy Materials | True North vs. Canlan Ice Sports |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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