Correlation Between Cariboo Rose and Eastfield Resources

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Can any of the company-specific risk be diversified away by investing in both Cariboo Rose and Eastfield 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 Cariboo Rose and Eastfield Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cariboo Rose Resources and Eastfield Resources, you can compare the effects of market volatilities on Cariboo Rose and Eastfield 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 Cariboo Rose with a short position of Eastfield Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cariboo Rose and Eastfield Resources.

Diversification Opportunities for Cariboo Rose and Eastfield Resources

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Cariboo and Eastfield is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cariboo Rose Resources and Eastfield Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastfield Resources and Cariboo Rose 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 Cariboo Rose Resources are associated (or correlated) with Eastfield Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastfield Resources has no effect on the direction of Cariboo Rose i.e., Cariboo Rose and Eastfield Resources go up and down completely randomly.

Pair Corralation between Cariboo Rose and Eastfield Resources

Assuming the 90 days horizon Cariboo Rose Resources is expected to generate 3.15 times more return on investment than Eastfield Resources. However, Cariboo Rose is 3.15 times more volatile than Eastfield Resources. It trades about 0.15 of its potential returns per unit of risk. Eastfield Resources is currently generating about -0.23 per unit of risk. If you would invest  4.00  in Cariboo Rose Resources on October 13, 2024 and sell it today you would earn a total of  1.00  from holding Cariboo Rose Resources or generate 25.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Cariboo Rose Resources  vs.  Eastfield Resources

 Performance 
       Timeline  
Cariboo Rose Resources 

Risk-Adjusted Performance

9 of 100

 
Weak
 
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OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cariboo Rose Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Cariboo Rose showed solid returns over the last few months and may actually be approaching a breakup point.
Eastfield Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eastfield Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cariboo Rose and Eastfield Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cariboo Rose and Eastfield Resources

The main advantage of trading using opposite Cariboo Rose and Eastfield Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cariboo Rose position performs unexpectedly, Eastfield 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 Eastfield Resources will offset losses from the drop in Eastfield Resources' long position.
The idea behind Cariboo Rose Resources and Eastfield Resources 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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