Correlation Between High Yield and Metals Acquisition
Can any of the company-specific risk be diversified away by investing in both High Yield and Metals Acquisition 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 High Yield and Metals Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Municipal Fund and Metals Acquisition Limited, you can compare the effects of market volatilities on High Yield and Metals Acquisition 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 High Yield with a short position of Metals Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Yield and Metals Acquisition.
Diversification Opportunities for High Yield and Metals Acquisition
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between High and Metals is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Municipal Fund and Metals Acquisition Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Acquisition and High Yield 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 High Yield Municipal Fund are associated (or correlated) with Metals Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Acquisition has no effect on the direction of High Yield i.e., High Yield and Metals Acquisition go up and down completely randomly.
Pair Corralation between High Yield and Metals Acquisition
Assuming the 90 days horizon High Yield is expected to generate 3.72 times less return on investment than Metals Acquisition. But when comparing it to its historical volatility, High Yield Municipal Fund is 21.65 times less risky than Metals Acquisition. It trades about 0.45 of its potential returns per unit of risk. Metals Acquisition Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,270 in Metals Acquisition Limited on September 13, 2024 and sell it today you would earn a total of 49.00 from holding Metals Acquisition Limited or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Yield Municipal Fund vs. Metals Acquisition Limited
Performance |
| Timeline |
| High Yield Municipal |
| Metals Acquisition |
High Yield and Metals Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Yield and Metals Acquisition
The main advantage of trading using opposite High Yield and Metals Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Yield position performs unexpectedly, Metals Acquisition 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 Metals Acquisition will offset losses from the drop in Metals Acquisition's long position.| High Yield vs. High Yield Fund Investor | High Yield vs. Intermediate Term Tax Free Bond | High Yield vs. California High Yield Municipal | High Yield vs. T Rowe Price |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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