Correlation Between Eagle Plains and Fjordland Exploration
Can any of the company-specific risk be diversified away by investing in both Eagle Plains and Fjordland Exploration 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 Eagle Plains and Fjordland Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Plains Resources and Fjordland Exploration, you can compare the effects of market volatilities on Eagle Plains and Fjordland Exploration 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 Eagle Plains with a short position of Fjordland Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Plains and Fjordland Exploration.
Diversification Opportunities for Eagle Plains and Fjordland Exploration
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eagle and Fjordland is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Plains Resources and Fjordland Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fjordland Exploration and Eagle Plains 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 Eagle Plains Resources are associated (or correlated) with Fjordland Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fjordland Exploration has no effect on the direction of Eagle Plains i.e., Eagle Plains and Fjordland Exploration go up and down completely randomly.
Pair Corralation between Eagle Plains and Fjordland Exploration
Assuming the 90 days horizon Eagle Plains is expected to generate 6.21 times less return on investment than Fjordland Exploration. But when comparing it to its historical volatility, Eagle Plains Resources is 4.72 times less risky than Fjordland Exploration. It trades about 0.09 of its potential returns per unit of risk. Fjordland Exploration is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.00 in Fjordland Exploration on December 8, 2024 and sell it today you would earn a total of 0.50 from holding Fjordland Exploration or generate 50.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Eagle Plains Resources vs. Fjordland Exploration
Performance |
Timeline |
Eagle Plains Resources |
Fjordland Exploration |
Eagle Plains and Fjordland Exploration Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eagle Plains and Fjordland Exploration
The main advantage of trading using opposite Eagle Plains and Fjordland Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Plains position performs unexpectedly, Fjordland Exploration 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 Fjordland Exploration will offset losses from the drop in Fjordland Exploration's long position.Eagle Plains vs. Commander Resources | Eagle Plains vs. Radius Gold | Eagle Plains vs. Fjordland Exploration | Eagle Plains vs. Bitterroot Resources |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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