Correlation Between E79 Resources and Cruz Cobalt

Can any of the company-specific risk be diversified away by investing in both E79 Resources and Cruz Cobalt 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 E79 Resources and Cruz Cobalt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between E79 Resources Corp and Cruz Cobalt Corp, you can compare the effects of market volatilities on E79 Resources and Cruz Cobalt 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 E79 Resources with a short position of Cruz Cobalt. Check out your portfolio center. Please also check ongoing floating volatility patterns of E79 Resources and Cruz Cobalt.

Diversification Opportunities for E79 Resources and Cruz Cobalt

0.26

Correlation Coefficient

E79 Resources  Cruz Cobalt

Modest diversification

The 3 months correlation between E79 and Cruz is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding E79 Resources Corp and Cruz Cobalt Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cruz Cobalt Corp and E79 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 E79 Resources Corp are associated (or correlated) with Cruz Cobalt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cruz Cobalt Corp has no effect on the direction of E79 Resources i.e., E79 Resources and Cruz Cobalt go up and down completely randomly.

Pair Corralation between E79 Resources and Cruz Cobalt

Assuming the 90 days horizon E79 Resources Corp is expected to generate 1.46 times more return on investment than Cruz Cobalt. However, E79 Resources is 1.46 times more volatile than Cruz Cobalt Corp. It trades about 0.03 of its potential returns per unit of risk. Cruz Cobalt Corp is currently generating about 0.02 per unit of risk. If you would invest  4.00  in E79 Resources Corp on September 9, 2024 and sell it today you would lose (2.47) from holding E79 Resources Corp or give up 61.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

E79 Resources Corp  vs.  Cruz Cobalt Corp

E79 Resources Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in E79 Resources Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, E79 Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Cruz Cobalt Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cruz Cobalt Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with E79 Resources and Cruz Cobalt

The main advantage of trading using opposite E79 Resources and Cruz Cobalt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E79 Resources position performs unexpectedly, Cruz Cobalt 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 Cruz Cobalt will offset losses from the drop in Cruz Cobalt's long position.

The idea behind E79 Resources Corp and Cruz Cobalt 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.