Correlation Between Rumble Resources and Resource Base

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

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

Diversification Opportunities for Rumble Resources and Resource Base

-0.31

Correlation Coefficient

Rumble Resources  Resource Base

Very good diversification

The 3 months correlation between Rumble and Resource is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Rumble Resources and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base and Rumble 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 Rumble Resources are associated (or correlated) with Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of Rumble Resources i.e., Rumble Resources and Resource Base go up and down completely randomly.

Pair Corralation between Rumble Resources and Resource Base

Assuming the 90 days trading horizon Rumble Resources is expected to under-perform the Resource Base. In addition to that, Rumble Resources is 1.36 times more volatile than Resource Base. It trades about -0.06 of its total potential returns per unit of risk. Resource Base is currently generating about -0.03 per unit of volatility. If you would invest  3.60  in Resource Base on December 30, 2024 and sell it today you would lose (0.30) from holding Resource Base or give up 8.33% of portfolio value over 90 days.

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

Rumble Resources  vs.  Resource Base

Rumble Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rumble Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Resource Base

Risk-Adjusted Performance

Very Weak

Over the last 90 days Resource Base has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Resource Base is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rumble Resources and Resource Base

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

The idea behind Rumble Resources and Resource Base 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.