Correlation Between Arbor Metals and Equity Metals
Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Equity 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 Arbor Metals and Equity Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Metals Corp and Equity Metals Corp, you can compare the effects of market volatilities on Arbor Metals and Equity 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 Arbor Metals with a short position of Equity Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Equity Metals.
Diversification Opportunities for Arbor Metals and Equity Metals
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Arbor and Equity is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Equity Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Metals Corp and Arbor Metals 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 Arbor Metals Corp are associated (or correlated) with Equity Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Metals Corp has no effect on the direction of Arbor Metals i.e., Arbor Metals and Equity Metals go up and down completely randomly.
Pair Corralation between Arbor Metals and Equity Metals
Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the Equity Metals. But the stock apears to be less risky and, when comparing its historical volatility, Arbor Metals Corp is 1.36 times less risky than Equity Metals. The stock trades about -0.06 of its potential returns per unit of risk. The Equity Metals Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Equity Metals Corp on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Equity Metals Corp or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Metals Corp vs. Equity Metals Corp
Performance |
| Timeline |
| Arbor Metals Corp |
| Equity Metals Corp |
Arbor Metals and Equity Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Metals and Equity Metals
The main advantage of trading using opposite Arbor Metals and Equity Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, Equity 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 Equity Metals will offset losses from the drop in Equity Metals' long position.| Arbor Metals vs. First Majestic Silver | Arbor Metals vs. Ivanhoe Energy | Arbor Metals vs. Orezone Gold Corp | Arbor Metals vs. Faraday Copper Corp |
| Equity Metals vs. Arbor Metals Corp | Equity Metals vs. Intact Financial Corp | Equity Metals vs. First National Financial | Equity Metals vs. Olympia Financial Group |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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