Correlation Between Arbor Metals and American Hotel
Can any of the company-specific risk be diversified away by investing in both Arbor Metals and American Hotel 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 American Hotel 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 American Hotel Income, you can compare the effects of market volatilities on Arbor Metals and American Hotel 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 American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and American Hotel.
Diversification Opportunities for Arbor Metals and American Hotel
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Arbor and American is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income 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 American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Arbor Metals i.e., Arbor Metals and American Hotel go up and down completely randomly.
Pair Corralation between Arbor Metals and American Hotel
Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the American Hotel. But the stock apears to be less risky and, when comparing its historical volatility, Arbor Metals Corp is 1.0 times less risky than American Hotel. The stock trades about -0.08 of its potential returns per unit of risk. The American Hotel Income is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 117.00 in American Hotel Income on September 1, 2024 and sell it today you would lose (81.00) from holding American Hotel Income or give up 69.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Metals Corp vs. American Hotel Income
Performance |
| Timeline |
| Arbor Metals Corp |
| American Hotel Income |
Arbor Metals and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Metals and American Hotel
The main advantage of trading using opposite Arbor Metals and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.| Arbor Metals vs. Kiplin Metals | Arbor Metals vs. Pure Energy Minerals | Arbor Metals vs. Noram Lithium Corp | Arbor Metals vs. Minnova Corp |
| American Hotel vs. Algonquin Power Utilities | American Hotel vs. Electra Battery Materials | American Hotel vs. Brookfield Office Properties | American Hotel vs. HOME DEPOT CDR |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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