Correlation Between Canada Rare and Qubec Nickel

Can any of the company-specific risk be diversified away by investing in both Canada Rare and Qubec Nickel 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 Canada Rare and Qubec Nickel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Canada Rare Earth and Qubec Nickel Corp, you can compare the effects of market volatilities on Canada Rare and Qubec Nickel 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 Canada Rare with a short position of Qubec Nickel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canada Rare and Qubec Nickel.

Diversification Opportunities for Canada Rare and Qubec Nickel

-0.18

Correlation Coefficient

Canada Rare  Qubec Nickel

Good diversification

The 3 months correlation between Canada and Qubec is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Canada Rare Earth and Qubec Nickel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qubec Nickel Corp and Canada Rare 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 Canada Rare Earth are associated (or correlated) with Qubec Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qubec Nickel Corp has no effect on the direction of Canada Rare i.e., Canada Rare and Qubec Nickel go up and down completely randomly.

Pair Corralation between Canada Rare and Qubec Nickel

Assuming the 90 days horizon Canada Rare Earth is expected to generate 4.39 times more return on investment than Qubec Nickel. However, Canada Rare is 4.39 times more volatile than Qubec Nickel Corp. It trades about 0.07 of its potential returns per unit of risk. Qubec Nickel Corp is currently generating about -0.07 per unit of risk. If you would invest  2.00  in Canada Rare Earth on October 9, 2024 and sell it today you would lose (0.62) from holding Canada Rare Earth or give up 31.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Canada Rare Earth  vs.  Qubec Nickel Corp

Canada Rare Earth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canada Rare Earth are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Canada Rare reported solid returns over the last few months and may actually be approaching a breakup point.

Qubec Nickel Corp

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Canada Rare and Qubec Nickel

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

The idea behind Canada Rare Earth and Qubec Nickel 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.