Correlation Between Admiral Group and Power Metal
Can any of the company-specific risk be diversified away by investing in both Admiral Group and Power Metal 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 Admiral Group and Power Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Admiral Group PLC and Power Metal Resources, you can compare the effects of market volatilities on Admiral Group and Power Metal 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 Admiral Group with a short position of Power Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Admiral Group and Power Metal.
Diversification Opportunities for Admiral Group and Power Metal
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Admiral and Power is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Admiral Group PLC and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources and Admiral Group 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 Admiral Group PLC are associated (or correlated) with Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Admiral Group i.e., Admiral Group and Power Metal go up and down completely randomly.
Pair Corralation between Admiral Group and Power Metal
Assuming the 90 days trading horizon Admiral Group PLC is expected to generate 0.34 times more return on investment than Power Metal. However, Admiral Group PLC is 2.92 times less risky than Power Metal. It trades about 0.05 of its potential returns per unit of risk. Power Metal Resources is currently generating about -0.01 per unit of risk. If you would invest 181,239 in Admiral Group PLC on August 29, 2024 and sell it today you would earn a total of 65,161 from holding Admiral Group PLC or generate 35.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Admiral Group PLC vs. Power Metal Resources
Performance |
| Timeline |
| Admiral Group PLC |
| Power Metal Resources |
Admiral Group and Power Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Admiral Group and Power Metal
The main advantage of trading using opposite Admiral Group and Power Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Admiral Group position performs unexpectedly, Power Metal 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 Power Metal will offset losses from the drop in Power Metal's long position.| Admiral Group vs. Power Metal Resources | Admiral Group vs. Fulcrum Metals PLC | Admiral Group vs. AMG Advanced Metallurgical | Admiral Group vs. Wheaton Precious Metals |
| Power Metal vs. Atalaya Mining | Power Metal vs. Anglo Asian Mining | Power Metal vs. Metals Exploration Plc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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