Correlation Between CDN Maverick and Emerita Resources

Can any of the company-specific risk be diversified away by investing in both CDN Maverick and Emerita Resources 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 CDN Maverick and Emerita Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CDN Maverick Capital and Emerita Resources Corp, you can compare the effects of market volatilities on CDN Maverick and Emerita Resources 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 CDN Maverick with a short position of Emerita Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN Maverick and Emerita Resources.

Diversification Opportunities for CDN Maverick and Emerita Resources

0.15

Correlation Coefficient

CDN Maverick  Emerita Resources

Average diversification

The 3 months correlation between CDN and Emerita is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CDN Maverick Capital and Emerita Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerita Resources Corp and CDN Maverick 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 CDN Maverick Capital are associated (or correlated) with Emerita Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerita Resources Corp has no effect on the direction of CDN Maverick i.e., CDN Maverick and Emerita Resources go up and down completely randomly.

Pair Corralation between CDN Maverick and Emerita Resources

Assuming the 90 days horizon CDN Maverick Capital is expected to generate 2.39 times more return on investment than Emerita Resources. However, CDN Maverick is 2.39 times more volatile than Emerita Resources Corp. It trades about 0.1 of its potential returns per unit of risk. Emerita Resources Corp is currently generating about 0.07 per unit of risk. If you would invest  8.00  in CDN Maverick Capital on December 28, 2024 and sell it today you would earn a total of  4.00  from holding CDN Maverick Capital or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CDN Maverick Capital  vs.  Emerita Resources Corp

CDN Maverick Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CDN Maverick Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, CDN Maverick reported solid returns over the last few months and may actually be approaching a breakup point.

Emerita Resources Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Emerita Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Emerita Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CDN Maverick and Emerita Resources

The main advantage of trading using opposite CDN Maverick and Emerita Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN Maverick position performs unexpectedly, Emerita Resources 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 Emerita Resources will offset losses from the drop in Emerita Resources' long position.

The idea behind CDN Maverick Capital and Emerita Resources Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.