Correlation Between Carbon Streaming and Dakota Gold

Can any of the company-specific risk be diversified away by investing in both Carbon Streaming and Dakota Gold 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 Carbon Streaming and Dakota Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Carbon Streaming and Dakota Gold

-0.6

Correlation Coefficient

Carbon Streaming  Dakota Gold

Excellent diversification

The 3 months correlation between Carbon and Dakota is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Carbon Streaming Corp and Dakota Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dakota Gold Corp and Carbon Streaming 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 Carbon Streaming Corp are associated (or correlated) with Dakota Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dakota Gold Corp has no effect on the direction of Carbon Streaming i.e., Carbon Streaming and Dakota Gold go up and down completely randomly.

Pair Corralation between Carbon Streaming and Dakota Gold

Assuming the 90 days horizon Carbon Streaming Corp is expected to under-perform the Dakota Gold. In addition to that, Carbon Streaming is 1.03 times more volatile than Dakota Gold Corp. It trades about -0.03 of its total potential returns per unit of risk. Dakota Gold Corp is currently generating about 0.1 per unit of volatility. If you would invest  215.00  in Dakota Gold Corp on December 28, 2024 and sell it today you would earn a total of  49.00  from holding Dakota Gold Corp or generate 22.79% return on investment over 90 days.

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

Carbon Streaming Corp  vs.  Dakota Gold Corp

Carbon Streaming Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carbon Streaming Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Dakota Gold Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dakota Gold Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, Dakota Gold exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carbon Streaming and Dakota Gold

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

The idea behind Carbon Streaming Corp and Dakota Gold 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.