Correlation Between Cartier Resources and Benton Resources

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

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

Diversification Opportunities for Cartier Resources and Benton Resources

0.37

Correlation Coefficient

Cartier Resources  Benton Resources

Weak diversification

The 3 months correlation between Cartier and Benton is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Cartier Resources and Benton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benton Resources and Cartier 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 Cartier Resources are associated (or correlated) with Benton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benton Resources has no effect on the direction of Cartier Resources i.e., Cartier Resources and Benton Resources go up and down completely randomly.

Pair Corralation between Cartier Resources and Benton Resources

Assuming the 90 days horizon Cartier Resources is expected to generate 0.99 times more return on investment than Benton Resources. However, Cartier Resources is 1.01 times less risky than Benton Resources. It trades about 0.11 of its potential returns per unit of risk. Benton Resources is currently generating about 0.01 per unit of risk. If you would invest  6.00  in Cartier Resources on September 3, 2024 and sell it today you would earn a total of  2.50  from holding Cartier Resources or generate 41.67% return on investment over 90 days.

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

Cartier Resources  vs.  Benton Resources

Cartier Resources

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Cartier Resources showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Cartier Resources and Benton Resources

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

The idea behind Cartier Resources and Benton 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.