Correlation Between Goeasy and Premium Resources

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

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

Diversification Opportunities for Goeasy and Premium Resources

-0.03

Correlation Coefficient

Goeasy  Premium Resources

Good diversification

The 3 months correlation between Goeasy and Premium is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding goeasy and Premium Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Resources and Goeasy 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 goeasy are associated (or correlated) with Premium Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Resources has no effect on the direction of Goeasy i.e., Goeasy and Premium Resources go up and down completely randomly.

Pair Corralation between Goeasy and Premium Resources

Assuming the 90 days trading horizon goeasy is expected to generate 0.3 times more return on investment than Premium Resources. However, goeasy is 3.35 times less risky than Premium Resources. It trades about 0.14 of its potential returns per unit of risk. Premium Resources is currently generating about -0.02 per unit of risk. If you would invest  15,575  in goeasy on May 6, 2025 and sell it today you would earn a total of  2,556  from holding goeasy or generate 16.41% return on investment over 90 days.

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

goeasy  vs.  Premium Resources

goeasy

Risk-Adjusted Performance

Good

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

Premium Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Premium Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental 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 Goeasy and Premium Resources

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

The idea behind goeasy and Premium 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.