Correlation Between Benton Resources and Maritime Resources

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

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

Diversification Opportunities for Benton Resources and Maritime Resources

0.31

Correlation Coefficient

Benton Resources  Maritime Resources

Weak diversification

The 3 months correlation between Benton and Maritime is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Benton Resources and Maritime Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maritime Resources Corp and Benton 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 Benton Resources are associated (or correlated) with Maritime Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maritime Resources Corp has no effect on the direction of Benton Resources i.e., Benton Resources and Maritime Resources go up and down completely randomly.

Pair Corralation between Benton Resources and Maritime Resources

Assuming the 90 days horizon Benton Resources is expected to generate 12.31 times less return on investment than Maritime Resources. In addition to that, Benton Resources is 1.31 times more volatile than Maritime Resources Corp. It trades about 0.01 of its total potential returns per unit of risk. Maritime Resources Corp is currently generating about 0.15 per unit of volatility. If you would invest  3.50  in Maritime Resources Corp on September 3, 2024 and sell it today you would earn a total of  2.00  from holding Maritime Resources Corp or generate 57.14% return on investment over 90 days.

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

Benton Resources  vs.  Maritime Resources Corp

Benton Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Benton Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Benton Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Maritime Resources Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maritime Resources Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Maritime Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Benton Resources and Maritime Resources

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

The idea behind Benton Resources and Maritime 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.