Correlation Between Pardee Resources and Burnham Holdings

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

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

Diversification Opportunities for Pardee Resources and Burnham Holdings

0.02

Correlation Coefficient

Pardee Resources  Burnham Holdings

Significant diversification

The 3 months correlation between Pardee and Burnham is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pardee Resources Co and Burnham Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burnham Holdings and Pardee Resources 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 Pardee Resources Co are associated (or correlated) with Burnham Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burnham Holdings has no effect on the direction of Pardee Resources i.e., Pardee Resources and Burnham Holdings go up and down completely randomly.

Pair Corralation between Pardee Resources and Burnham Holdings

Given the investment horizon of 90 days Pardee Resources Co is expected to generate 1.03 times more return on investment than Burnham Holdings. However, Pardee Resources is 1.03 times more volatile than Burnham Holdings. It trades about 0.04 of its potential returns per unit of risk. Burnham Holdings is currently generating about 0.03 per unit of risk. If you would invest  22,733  in Pardee Resources Co on October 13, 2024 and sell it today you would earn a total of  8,766  from holding Pardee Resources Co or generate 38.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.11%
Values	Daily Returns

Pardee Resources Co  vs.  Burnham Holdings

Pardee Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pardee Resources Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Pardee Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Burnham Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Burnham Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Burnham Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Pardee Resources and Burnham Holdings

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

The idea behind Pardee Resources Co and Burnham Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.