Correlation Between Tree Island and CANEX Metals
Can any of the company-specific risk be diversified away by investing in both Tree Island and CANEX Metals 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 Tree Island and CANEX Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tree Island Steel and CANEX Metals, you can compare the effects of market volatilities on Tree Island and CANEX Metals 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 Tree Island with a short position of CANEX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tree Island and CANEX Metals.
Diversification Opportunities for Tree Island and CANEX Metals
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tree and CANEX is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tree Island Steel and CANEX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANEX Metals and Tree Island 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 Tree Island Steel are associated (or correlated) with CANEX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANEX Metals has no effect on the direction of Tree Island i.e., Tree Island and CANEX Metals go up and down completely randomly.
Pair Corralation between Tree Island and CANEX Metals
Assuming the 90 days trading horizon Tree Island is expected to generate 11.15 times less return on investment than CANEX Metals. But when comparing it to its historical volatility, Tree Island Steel is 5.98 times less risky than CANEX Metals. It trades about 0.09 of its potential returns per unit of risk. CANEX Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 8.00 in CANEX Metals on July 11, 2025 and sell it today you would earn a total of 9.00 from holding CANEX Metals or generate 112.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tree Island Steel vs. CANEX Metals
Performance |
| Timeline |
| Tree Island Steel |
| CANEX Metals |
Tree Island and CANEX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tree Island and CANEX Metals
The main advantage of trading using opposite Tree Island and CANEX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tree Island position performs unexpectedly, CANEX Metals 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 CANEX Metals will offset losses from the drop in CANEX Metals' long position.| Tree Island vs. Algoma Steel Group | Tree Island vs. Champion Iron | Tree Island vs. Friedman Industries Common | Tree Island vs. Labrador Iron Ore |
| CANEX Metals vs. Magna Terra Minerals | CANEX Metals vs. Golden Pursuit Resources | CANEX Metals vs. Wildsky Resources | CANEX Metals vs. Inventus Mining 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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