Correlation Between Canoe EIT and ROKMASTER Resources

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

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

Diversification Opportunities for Canoe EIT and ROKMASTER Resources

-0.5

Correlation Coefficient

Canoe EIT  ROKMASTER Resources

Very good diversification

The 3 months correlation between Canoe and ROKMASTER is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Canoe EIT Income and ROKMASTER Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROKMASTER Resources Corp and Canoe EIT 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 Canoe EIT Income are associated (or correlated) with ROKMASTER Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROKMASTER Resources Corp has no effect on the direction of Canoe EIT i.e., Canoe EIT and ROKMASTER Resources go up and down completely randomly.

Pair Corralation between Canoe EIT and ROKMASTER Resources

Assuming the 90 days trading horizon Canoe EIT Income is expected to under-perform the ROKMASTER Resources. But the stock apears to be less risky and, when comparing its historical volatility, Canoe EIT Income is 29.21 times less risky than ROKMASTER Resources. The stock trades about -0.09 of its potential returns per unit of risk. The ROKMASTER Resources Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.00  in ROKMASTER Resources Corp on October 10, 2024 and sell it today you would earn a total of  0.50  from holding ROKMASTER Resources Corp or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Canoe EIT Income  vs.  ROKMASTER Resources Corp

Canoe EIT Income

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canoe EIT Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canoe EIT is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ROKMASTER Resources Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ROKMASTER Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ROKMASTER Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canoe EIT and ROKMASTER Resources

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

The idea behind Canoe EIT Income and ROKMASTER 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.