Correlation Between Morien Resources and Cargojet

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

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

Diversification Opportunities for Morien Resources and Cargojet

-0.51

Correlation Coefficient

Morien Resources  Cargojet

Excellent diversification

The 3 months correlation between Morien and Cargojet is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Morien Resources Corp and Cargojet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargojet and Morien 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 Morien Resources Corp are associated (or correlated) with Cargojet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargojet has no effect on the direction of Morien Resources i.e., Morien Resources and Cargojet go up and down completely randomly.

Pair Corralation between Morien Resources and Cargojet

Assuming the 90 days horizon Morien Resources Corp is expected to under-perform the Cargojet. In addition to that, Morien Resources is 2.61 times more volatile than Cargojet. It trades about -0.01 of its total potential returns per unit of risk. Cargojet is currently generating about 0.06 per unit of volatility. If you would invest  11,040  in Cargojet on February 29, 2024 and sell it today you would earn a total of  631.00  from holding Cargojet or generate 5.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Morien Resources Corp  vs.  Cargojet

Morien Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morien Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Morien Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cargojet

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cargojet are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Cargojet may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Morien Resources and Cargojet

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

The idea behind Morien Resources Corp and Cargojet 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.