Correlation Between Alliance Mining and Economic Investment
Can any of the company-specific risk be diversified away by investing in both Alliance Mining and Economic Investment 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 Alliance Mining and Economic Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Mining Corp and Economic Investment Trust, you can compare the effects of market volatilities on Alliance Mining and Economic Investment 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 Alliance Mining with a short position of Economic Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Mining and Economic Investment.
Diversification Opportunities for Alliance Mining and Economic Investment
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alliance and Economic is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Mining Corp and Economic Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Economic Investment Trust and Alliance Mining 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 Alliance Mining Corp are associated (or correlated) with Economic Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Economic Investment Trust has no effect on the direction of Alliance Mining i.e., Alliance Mining and Economic Investment go up and down completely randomly.
Pair Corralation between Alliance Mining and Economic Investment
Assuming the 90 days horizon Alliance Mining Corp is expected to under-perform the Economic Investment. In addition to that, Alliance Mining is 10.44 times more volatile than Economic Investment Trust. It trades about -0.31 of its total potential returns per unit of risk. Economic Investment Trust is currently generating about -0.27 per unit of volatility. If you would invest 17,435 in Economic Investment Trust on September 15, 2024 and sell it today you would lose (955.00) from holding Economic Investment Trust or give up 5.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alliance Mining Corp vs. Economic Investment Trust
Performance |
| Timeline |
| Alliance Mining Corp |
| Economic Investment Trust |
Alliance Mining and Economic Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Mining and Economic Investment
The main advantage of trading using opposite Alliance Mining and Economic Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Mining position performs unexpectedly, Economic Investment 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 Economic Investment will offset losses from the drop in Economic Investment's long position.| Alliance Mining vs. Economic Investment Trust | Alliance Mining vs. High Liner Foods | Alliance Mining vs. Forsys Metals Corp | Alliance Mining vs. Guru Organic Energy |
| Economic Investment vs. Uniteds Limited | Economic Investment vs. E L Financial Corp | Economic Investment vs. Canadian General Investments | Economic Investment vs. Clairvest 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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