Correlation Between Brightrock Gold and Cartier Iron

Can any of the company-specific risk be diversified away by investing in both Brightrock Gold and Cartier Iron 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 Brightrock Gold and Cartier Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Brightrock Gold and Cartier Iron

0.75

Correlation Coefficient

Brightrock Gold  Cartier Iron

Poor diversification

The 3 months correlation between Brightrock and Cartier is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Brightrock Gold Corp and Cartier Iron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cartier Iron Corp and Brightrock Gold 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 Brightrock Gold Corp are associated (or correlated) with Cartier Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cartier Iron Corp has no effect on the direction of Brightrock Gold i.e., Brightrock Gold and Cartier Iron go up and down completely randomly.

Pair Corralation between Brightrock Gold and Cartier Iron

Given the investment horizon of 90 days Brightrock Gold Corp is expected to under-perform the Cartier Iron. But the pink sheet apears to be less risky and, when comparing its historical volatility, Brightrock Gold Corp is 6.54 times less risky than Cartier Iron. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Cartier Iron Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Cartier Iron Corp on September 13, 2024 and sell it today you would lose (7.00) from holding Cartier Iron Corp or give up 63.64% of portfolio value over 90 days.

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

Brightrock Gold Corp  vs.  Cartier Iron Corp

Brightrock Gold Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brightrock Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cartier Iron Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Iron Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, Cartier Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brightrock Gold and Cartier Iron

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

The idea behind Brightrock Gold Corp and Cartier Iron Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.