Correlation Between Arbor Metals and Stampede Drilling
Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Stampede Drilling 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 Stampede Drilling 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 Stampede Drilling, you can compare the effects of market volatilities on Arbor Metals and Stampede Drilling 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 Stampede Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Stampede Drilling.
Diversification Opportunities for Arbor Metals and Stampede Drilling
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arbor and Stampede is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Stampede Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stampede Drilling 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 Stampede Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stampede Drilling has no effect on the direction of Arbor Metals i.e., Arbor Metals and Stampede Drilling go up and down completely randomly.
Pair Corralation between Arbor Metals and Stampede Drilling
Assuming the 90 days horizon Arbor Metals Corp is expected to under-perform the Stampede Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Arbor Metals Corp is 1.24 times less risky than Stampede Drilling. The stock trades about -0.16 of its potential returns per unit of risk. The Stampede Drilling is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Stampede Drilling on September 12, 2024 and sell it today you would lose (1.00) from holding Stampede Drilling or give up 5.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arbor Metals Corp vs. Stampede Drilling
Performance |
| Timeline |
| Arbor Metals Corp |
| Stampede Drilling |
Arbor Metals and Stampede Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arbor Metals and Stampede Drilling
The main advantage of trading using opposite Arbor Metals and Stampede Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, Stampede Drilling 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 Stampede Drilling will offset losses from the drop in Stampede Drilling's long position.| Arbor Metals vs. Foraco International SA | Arbor Metals vs. Geodrill Limited | Arbor Metals vs. Major Drilling Group | Arbor Metals vs. Bri Chem Corp |
| Stampede Drilling vs. Trican Well Service | Stampede Drilling vs. Ensign Energy Services | Stampede Drilling vs. Calfrac Well Services | Stampede Drilling vs. Birchcliff Energy |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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