Correlation Between Tourmaline Oil and Scandium Canada

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

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

Diversification Opportunities for Tourmaline Oil and Scandium Canada

-0.24

Correlation Coefficient

Tourmaline Oil  Scandium Canada

Very good diversification

The 3 months correlation between Tourmaline and Scandium is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Tourmaline Oil Corp and Scandium Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandium Canada and Tourmaline Oil 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 Tourmaline Oil Corp are associated (or correlated) with Scandium Canada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandium Canada has no effect on the direction of Tourmaline Oil i.e., Tourmaline Oil and Scandium Canada go up and down completely randomly.

Pair Corralation between Tourmaline Oil and Scandium Canada

Assuming the 90 days trading horizon Tourmaline Oil is expected to generate 24.34 times less return on investment than Scandium Canada. But when comparing it to its historical volatility, Tourmaline Oil Corp is 10.79 times less risky than Scandium Canada. It trades about 0.03 of its potential returns per unit of risk. Scandium Canada is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Scandium Canada on December 4, 2024 and sell it today you would earn a total of  0.00  from holding Scandium Canada or generate 0.0% return on investment over 90 days.

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

Tourmaline Oil Corp  vs.  Scandium Canada

Tourmaline Oil Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tourmaline Oil Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Tourmaline Oil is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Scandium Canada

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Scandium Canada are ranked lower than 6 (%) 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.

Pair Trading with Tourmaline Oil and Scandium Canada

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

The idea behind Tourmaline Oil Corp and Scandium Canada 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.