Correlation Between Cartier Iron and Max Resource

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

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

Diversification Opportunities for Cartier Iron and Max Resource

0.67

Correlation Coefficient

Cartier Iron  Max Resource

Poor diversification

The 3 months correlation between Cartier and Max is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Cartier Iron Corp and Max Resource Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Resource Corp and Cartier Iron 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 Cartier Iron Corp are associated (or correlated) with Max Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Resource Corp has no effect on the direction of Cartier Iron i.e., Cartier Iron and Max Resource go up and down completely randomly.

Pair Corralation between Cartier Iron and Max Resource

Assuming the 90 days horizon Cartier Iron Corp is expected to generate 4.84 times more return on investment than Max Resource. However, Cartier Iron is 4.84 times more volatile than Max Resource Corp. It trades about 0.09 of its potential returns per unit of risk. Max Resource Corp is currently generating about -0.01 per unit of risk. If you would invest  12.00  in Cartier Iron Corp on September 1, 2024 and sell it today you would lose (6.50) from holding Cartier Iron Corp or give up 54.17% of portfolio value over 90 days.

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

Cartier Iron Corp  vs.  Max Resource Corp

Cartier Iron Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cartier Iron Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Cartier Iron reported solid returns over the last few months and may actually be approaching a breakup point.

Max Resource Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Max Resource Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Max Resource is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cartier Iron and Max Resource

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

The idea behind Cartier Iron Corp and Max Resource 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.