Correlation Between Norra Metals and Benton Resources

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

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

Diversification Opportunities for Norra Metals and Benton Resources

0.0

Correlation Coefficient

Norra Metals  Benton Resources

Pay attention - limited upside

The 3 months correlation between Norra and Benton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Norra Metals Corp and Benton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benton Resources and Norra Metals 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 Norra Metals Corp 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 Norra Metals i.e., Norra Metals and Benton Resources go up and down completely randomly.

Pair Corralation between Norra Metals and Benton Resources

If you would invest  3.80  in Benton Resources on October 9, 2024 and sell it today you would earn a total of  3.20  from holding Benton Resources or generate 84.21% return on investment over 90 days.

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

Norra Metals Corp  vs.  Benton Resources

Norra Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norra Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Norra Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Benton Resources

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Norra Metals and Benton Resources

The main advantage of trading using opposite Norra Metals and Benton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norra Metals 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 Norra Metals Corp 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.