Correlation Between Benton Resources and Pan Global

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

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

Diversification Opportunities for Benton Resources and Pan Global

-0.05

Correlation Coefficient

Benton Resources  Pan Global

Good diversification

The 3 months correlation between Benton and Pan is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Benton Resources and Pan Global Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Global Resources and Benton 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 Benton Resources are associated (or correlated) with Pan Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Global Resources has no effect on the direction of Benton Resources i.e., Benton Resources and Pan Global go up and down completely randomly.

Pair Corralation between Benton Resources and Pan Global

Assuming the 90 days horizon Benton Resources is expected to generate 4.29 times more return on investment than Pan Global. However, Benton Resources is 4.29 times more volatile than Pan Global Resources. It trades about 0.06 of its potential returns per unit of risk. Pan Global Resources is currently generating about -0.15 per unit of risk. If you would invest  7.00  in Benton Resources on September 5, 2024 and sell it today you would lose (1.33) from holding Benton Resources or give up 19.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Benton Resources  vs.  Pan Global Resources

Benton Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Benton Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Benton Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pan Global Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Benton Resources and Pan Global

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

The idea behind Benton Resources and Pan Global 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 Anywhere module to track or share privately all of your investments from the convenience of any device.