Correlation Between Prairie Provident and International Precious

Can any of the company-specific risk be diversified away by investing in both Prairie Provident and International Precious 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 Prairie Provident and International Precious into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Prairie Provident Resources and International Precious Minerals, you can compare the effects of market volatilities on Prairie Provident and International Precious 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 Prairie Provident with a short position of International Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prairie Provident and International Precious.

Diversification Opportunities for Prairie Provident and International Precious

-0.04

Correlation Coefficient

Prairie Provident  International Precious

Good diversification

The 3 months correlation between Prairie and International is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Prairie Provident Resources and International Precious Mineral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Precious and Prairie Provident 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 Prairie Provident Resources are associated (or correlated) with International Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Precious has no effect on the direction of Prairie Provident i.e., Prairie Provident and International Precious go up and down completely randomly.

Pair Corralation between Prairie Provident and International Precious

If you would invest  2.78  in Prairie Provident Resources on August 31, 2024 and sell it today you would lose (0.59) from holding Prairie Provident Resources or give up 21.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Prairie Provident Resources  vs.  International Precious Mineral

Prairie Provident

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Prairie Provident Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Prairie Provident reported solid returns over the last few months and may actually be approaching a breakup point.

International Precious

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Prairie Provident and International Precious

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

The idea behind Prairie Provident Resources and International Precious Minerals 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.