Correlation Between Tectonic Metals and Irving Resources

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

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

Diversification Opportunities for Tectonic Metals and Irving Resources

-0.08

Correlation Coefficient

Tectonic Metals  Irving Resources

Good diversification

The 3 months correlation between Tectonic and Irving is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Metals and Irving Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Irving Resources and Tectonic Metals 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 Tectonic Metals are associated (or correlated) with Irving Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Irving Resources has no effect on the direction of Tectonic Metals i.e., Tectonic Metals and Irving Resources go up and down completely randomly.

Pair Corralation between Tectonic Metals and Irving Resources

Assuming the 90 days horizon Tectonic Metals is expected to generate 0.89 times more return on investment than Irving Resources. However, Tectonic Metals is 1.12 times less risky than Irving Resources. It trades about -0.01 of its potential returns per unit of risk. Irving Resources is currently generating about -0.01 per unit of risk. If you would invest  11.00  in Tectonic Metals on November 29, 2024 and sell it today you would lose (7.31) from holding Tectonic Metals or give up 66.45% of portfolio value over 90 days.

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

Tectonic Metals  vs.  Irving Resources

Tectonic Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Metals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tectonic Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Irving Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Irving Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Tectonic Metals and Irving Resources

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

The idea behind Tectonic Metals and Irving Resources 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.