Correlation Between Diamond Fields and Entree Resources

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

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

Diversification Opportunities for Diamond Fields and Entree Resources

-0.67

Correlation Coefficient

Diamond Fields  Entree Resources

Excellent diversification

The 3 months correlation between Diamond and Entree is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and Entree Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entree Resources and Diamond Fields 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 Diamond Fields Resources are associated (or correlated) with Entree Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entree Resources has no effect on the direction of Diamond Fields i.e., Diamond Fields and Entree Resources go up and down completely randomly.

Pair Corralation between Diamond Fields and Entree Resources

Assuming the 90 days horizon Diamond Fields is expected to generate 3.97 times less return on investment than Entree Resources. In addition to that, Diamond Fields is 4.04 times more volatile than Entree Resources. It trades about 0.01 of its total potential returns per unit of risk. Entree Resources is currently generating about 0.09 per unit of volatility. If you would invest  122.00  in Entree Resources on October 5, 2024 and sell it today you would earn a total of  152.00  from holding Entree Resources or generate 124.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.78%
Values	Daily Returns

Diamond Fields Resources  vs.  Entree Resources

Diamond Fields Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamond Fields 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.

Entree Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Entree Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Entree Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Diamond Fields and Entree Resources

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

The idea behind Diamond Fields Resources and Entree 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.