Correlation Between Entree Resources and Mirasol Resources

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

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

Diversification Opportunities for Entree Resources and Mirasol Resources

0.14

Correlation Coefficient

Entree Resources  Mirasol Resources

Average diversification

The 3 months correlation between Entree and Mirasol is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Entree Resources and Mirasol Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirasol Resources and Entree 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 Entree Resources are associated (or correlated) with Mirasol Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirasol Resources has no effect on the direction of Entree Resources i.e., Entree Resources and Mirasol Resources go up and down completely randomly.

Pair Corralation between Entree Resources and Mirasol Resources

Assuming the 90 days trading horizon Entree Resources is expected to generate 0.61 times more return on investment than Mirasol Resources. However, Entree Resources is 1.64 times less risky than Mirasol Resources. It trades about 0.06 of its potential returns per unit of risk. Mirasol Resources is currently generating about -0.03 per unit of risk. If you would invest  115.00  in Entree Resources on March 24, 2025 and sell it today you would earn a total of  84.00  from holding Entree Resources or generate 73.04% return on investment over 90 days.

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

Entree Resources  vs.  Mirasol Resources

Entree Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Entree Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Entree Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mirasol Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mirasol Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Entree Resources and Mirasol Resources

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

The idea behind Entree Resources and Mirasol Resources 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.