Correlation Between Canlan Ice and Mammoth Resources

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

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

Diversification Opportunities for Canlan Ice and Mammoth Resources

-0.2

Correlation Coefficient

Canlan Ice  Mammoth Resources

Good diversification

The 3 months correlation between Canlan and Mammoth is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Canlan Ice Sports and Mammoth Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Resources Corp and Canlan Ice 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 Canlan Ice Sports are associated (or correlated) with Mammoth Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Resources Corp has no effect on the direction of Canlan Ice i.e., Canlan Ice and Mammoth Resources go up and down completely randomly.

Pair Corralation between Canlan Ice and Mammoth Resources

Assuming the 90 days trading horizon Canlan Ice Sports is expected to under-perform the Mammoth Resources. But the stock apears to be less risky and, when comparing its historical volatility, Canlan Ice Sports is 9.12 times less risky than Mammoth Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Mammoth Resources Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Mammoth Resources Corp on October 5, 2024 and sell it today you would lose (1.00) from holding Mammoth Resources Corp or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Canlan Ice Sports  vs.  Mammoth Resources Corp

Canlan Ice Sports

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canlan Ice Sports has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Canlan Ice is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mammoth Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mammoth Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mammoth 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 Canlan Ice and Mammoth Resources

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

The idea behind Canlan Ice Sports and Mammoth 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.