Correlation Between Terreno Resources and Converge Technology
Can any of the company-specific risk be diversified away by investing in both Terreno Resources and Converge Technology 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 Terreno Resources and Converge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terreno Resources Corp and Converge Technology Solutions, you can compare the effects of market volatilities on Terreno Resources and Converge Technology 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 Terreno Resources with a short position of Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terreno Resources and Converge Technology.
Diversification Opportunities for Terreno Resources and Converge Technology
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Terreno and Converge is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Terreno Resources Corp and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology and Terreno Resources 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 Terreno Resources Corp are associated (or correlated) with Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of Terreno Resources i.e., Terreno Resources and Converge Technology go up and down completely randomly.
Pair Corralation between Terreno Resources and Converge Technology
Assuming the 90 days trading horizon Terreno Resources Corp is expected to generate 6.47 times more return on investment than Converge Technology. However, Terreno Resources is 6.47 times more volatile than Converge Technology Solutions. It trades about 0.07 of its potential returns per unit of risk. Converge Technology Solutions is currently generating about -0.01 per unit of risk. If you would invest 2.00 in Terreno Resources Corp on September 3, 2024 and sell it today you would lose (1.00) from holding Terreno Resources Corp or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Terreno Resources Corp vs. Converge Technology Solutions
Performance |
| Timeline |
| Terreno Resources Corp |
| Converge Technology |
Terreno Resources and Converge Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terreno Resources and Converge Technology
The main advantage of trading using opposite Terreno Resources and Converge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terreno Resources position performs unexpectedly, Converge Technology 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 Converge Technology will offset losses from the drop in Converge Technology's long position.| Terreno Resources vs. Arizona Metals Corp | Terreno Resources vs. Boat Rocker Media | Terreno Resources vs. Lion One Metals | Terreno Resources vs. Canso Select Opportunities |
| Converge Technology vs. Enghouse Systems | Converge Technology vs. Pulse Seismic | Converge Technology vs. Harvest Global REIT | Converge Technology vs. International Zeolite 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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