Correlation Between Scandium Canada and Royal Canadian

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

By analyzing existing cross correlation between Scandium Canada and Royal Canadian Mint, you can compare the effects of market volatilities on Scandium Canada and Royal Canadian 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 Scandium Canada with a short position of Royal Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandium Canada and Royal Canadian.

Diversification Opportunities for Scandium Canada and Royal Canadian

-0.37

Correlation Coefficient

Scandium Canada  Royal Canadian

Very good diversification

The 3 months correlation between Scandium and Royal is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Scandium Canada and Royal Canadian Mint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Canadian Mint and Scandium Canada 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 Scandium Canada are associated (or correlated) with Royal Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Canadian Mint has no effect on the direction of Scandium Canada i.e., Scandium Canada and Royal Canadian go up and down completely randomly.

Pair Corralation between Scandium Canada and Royal Canadian

Assuming the 90 days horizon Scandium Canada is expected to generate 13.98 times more return on investment than Royal Canadian. However, Scandium Canada is 13.98 times more volatile than Royal Canadian Mint. It trades about 0.05 of its potential returns per unit of risk. Royal Canadian Mint is currently generating about 0.15 per unit of risk. If you would invest  3.00  in Scandium Canada on August 31, 2024 and sell it today you would lose (0.50) from holding Scandium Canada or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Scandium Canada  vs.  Royal Canadian Mint

Scandium Canada

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Scandium Canada are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Scandium Canada showed solid returns over the last few months and may actually be approaching a breakup point.

Royal Canadian Mint

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Royal Canadian Mint are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Royal Canadian may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Scandium Canada and Royal Canadian

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

The idea behind Scandium Canada and Royal Canadian Mint 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.