Correlation Between Burnham Holdings and Pardee Resources

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

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

Diversification Opportunities for Burnham Holdings and Pardee Resources

0.02

Correlation Coefficient

Burnham Holdings  Pardee Resources

Significant diversification

The 3 months correlation between Burnham and Pardee is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Burnham Holdings and Pardee Resources Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pardee Resources and Burnham Holdings 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 Burnham Holdings are associated (or correlated) with Pardee Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pardee Resources has no effect on the direction of Burnham Holdings i.e., Burnham Holdings and Pardee Resources go up and down completely randomly.

Pair Corralation between Burnham Holdings and Pardee Resources

Assuming the 90 days horizon Burnham Holdings is expected to generate 5.64 times less return on investment than Pardee Resources. But when comparing it to its historical volatility, Burnham Holdings is 2.36 times less risky than Pardee Resources. It trades about 0.03 of its potential returns per unit of risk. Pardee Resources Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  30,704  in Pardee Resources Co on October 13, 2024 and sell it today you would earn a total of  795.00  from holding Pardee Resources Co or generate 2.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Burnham Holdings  vs.  Pardee Resources Co

Burnham Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Burnham Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pardee Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pardee Resources Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Pardee Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Burnham Holdings and Pardee Resources

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

The idea behind Burnham Holdings and Pardee Resources Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.