Correlation Between Ecora Resources and Canadian Net

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

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

Diversification Opportunities for Ecora Resources and Canadian Net

0.72

Correlation Coefficient

Ecora Resources  Canadian Net

Poor diversification

The 3 months correlation between Ecora and Canadian is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ecora Resources plc and Canadian Net Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Net Real and Ecora 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 Ecora Resources plc are associated (or correlated) with Canadian Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Net Real has no effect on the direction of Ecora Resources i.e., Ecora Resources and Canadian Net go up and down completely randomly.

Pair Corralation between Ecora Resources and Canadian Net

Assuming the 90 days trading horizon Ecora Resources plc is expected to generate 2.56 times more return on investment than Canadian Net. However, Ecora Resources is 2.56 times more volatile than Canadian Net Real. It trades about 0.15 of its potential returns per unit of risk. Canadian Net Real is currently generating about 0.05 per unit of risk. If you would invest  109.00  in Ecora Resources plc on May 20, 2025 and sell it today you would earn a total of  27.00  from holding Ecora Resources plc or generate 24.77% return on investment over 90 days.

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

Ecora Resources plc  vs.  Canadian Net Real

Ecora Resources plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ecora Resources plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Ecora Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Canadian Net Real

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Net Real are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Canadian Net is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ecora Resources and Canadian Net

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

The idea behind Ecora Resources plc and Canadian Net Real 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.