Correlation Between True North and Cameco Corp
Can any of the company-specific risk be diversified away by investing in both True North and Cameco Corp 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 True North and Cameco Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between True North Gems and Cameco Corp, you can compare the effects of market volatilities on True North and Cameco Corp 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 True North with a short position of Cameco Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of True North and Cameco Corp.
Diversification Opportunities for True North and Cameco Corp
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between True and Cameco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding True North Gems and Cameco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameco Corp and True North 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 True North Gems are associated (or correlated) with Cameco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameco Corp has no effect on the direction of True North i.e., True North and Cameco Corp go up and down completely randomly.
Pair Corralation between True North and Cameco Corp
Assuming the 90 days horizon True North is expected to generate 1.11 times less return on investment than Cameco Corp. In addition to that, True North is 2.75 times more volatile than Cameco Corp. It trades about 0.02 of its total potential returns per unit of risk. Cameco Corp is currently generating about 0.06 per unit of volatility. If you would invest 3,345 in Cameco Corp on January 24, 2024 and sell it today you would earn a total of 3,136 from holding Cameco Corp or generate 93.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
True North Gems vs. Cameco Corp
Performance |
| Timeline |
| True North Gems |
| Cameco Corp |
True North and Cameco Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with True North and Cameco Corp
The main advantage of trading using opposite True North and Cameco Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True North position performs unexpectedly, Cameco Corp 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 Cameco Corp will offset losses from the drop in Cameco Corp's long position.| True North vs. NeuPath Health | True North vs. Chemtrade Logistics Income | True North vs. SalesforceCom CDR | True North vs. WELL Health Technologies |
| Cameco Corp vs. Denison Mines Corp | Cameco Corp vs. Barrick Gold Corp | Cameco Corp vs. First Quantum Minerals | Cameco Corp vs. Kinross Gold Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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