Correlation Between Fredonia Mining and Canso Select

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

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

Diversification Opportunities for Fredonia Mining and Canso Select

0.25

Correlation Coefficient

Fredonia Mining  Canso Select

Modest diversification

The 3 months correlation between Fredonia and Canso is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Fredonia Mining and Canso Select Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canso Select Opportu and Fredonia Mining 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 Fredonia Mining are associated (or correlated) with Canso Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canso Select Opportu has no effect on the direction of Fredonia Mining i.e., Fredonia Mining and Canso Select go up and down completely randomly.

Pair Corralation between Fredonia Mining and Canso Select

Assuming the 90 days trading horizon Fredonia Mining is expected to under-perform the Canso Select. In addition to that, Fredonia Mining is 1.47 times more volatile than Canso Select Opportunities. It trades about -0.16 of its total potential returns per unit of risk. Canso Select Opportunities is currently generating about 0.04 per unit of volatility. If you would invest  225.00  in Canso Select Opportunities on September 22, 2024 and sell it today you would earn a total of  5.00  from holding Canso Select Opportunities or generate 2.22% return on investment over 90 days.

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

Fredonia Mining  vs.  Canso Select Opportunities

Fredonia Mining

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fredonia Mining are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Fredonia Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Canso Select Opportu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canso Select Opportunities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Canso Select may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fredonia Mining and Canso Select

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

The idea behind Fredonia Mining and Canso Select Opportunities 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.