Correlation Between Therma Bright and Royal Canadian

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Can any of the company-specific risk be diversified away by investing in both Therma Bright 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 Therma Bright and Royal Canadian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Therma Bright and Royal Canadian Mint, you can compare the effects of market volatilities on Therma Bright 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 Therma Bright with a short position of Royal Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Therma Bright and Royal Canadian.

Diversification Opportunities for Therma Bright and Royal Canadian

ThermaRoyalDiversified AwayThermaRoyalDiversified Away100%
-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Therma and Royal is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright 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 Therma Bright 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 Therma Bright 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 Therma Bright i.e., Therma Bright and Royal Canadian go up and down completely randomly.

Pair Corralation between Therma Bright and Royal Canadian

Assuming the 90 days trading horizon Therma Bright is expected to under-perform the Royal Canadian. In addition to that, Therma Bright is 11.73 times more volatile than Royal Canadian Mint. It trades about -0.01 of its total potential returns per unit of risk. Royal Canadian Mint is currently generating about 0.09 per unit of volatility. If you would invest  3,675  in Royal Canadian Mint on September 25, 2024 and sell it today you would earn a total of  241.00  from holding Royal Canadian Mint or generate 6.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Therma Bright  vs.  Royal Canadian Mint

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -60-40-200
JavaScript chart by amCharts 3.21.15THRM MNT
       Timeline  
Therma Bright 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Therma Bright has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.020.0250.030.0350.040.0450.050.0550.060.065
Royal Canadian Mint 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Royal Canadian Mint are ranked lower than 7 (%) 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 January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec36.53737.53838.53939.54040.5

Therma Bright and Royal Canadian Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-21.77-16.31-10.84-5.37-0.08654.9310.1215.3120.525.69 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15THRM MNT
       Returns  

Pair Trading with Therma Bright and Royal Canadian

The main advantage of trading using opposite Therma Bright and Royal Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright 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 Therma Bright 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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