Correlation Between Arizona Metals and Canadian Utilities
Can any of the company-specific risk be diversified away by investing in both Arizona Metals and Canadian Utilities 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 Arizona Metals and Canadian Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arizona Metals Corp and Canadian Utilities Ltd, you can compare the effects of market volatilities on Arizona Metals and Canadian Utilities 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 Arizona Metals with a short position of Canadian Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arizona Metals and Canadian Utilities.
Diversification Opportunities for Arizona Metals and Canadian Utilities
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Arizona and Canadian is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Arizona Metals Corp and Canadian Utilities Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Utilities and Arizona 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 Arizona Metals Corp are associated (or correlated) with Canadian Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Utilities has no effect on the direction of Arizona Metals i.e., Arizona Metals and Canadian Utilities go up and down completely randomly.
Pair Corralation between Arizona Metals and Canadian Utilities
Assuming the 90 days trading horizon Arizona Metals Corp is expected to generate 5.2 times more return on investment than Canadian Utilities. However, Arizona Metals is 5.2 times more volatile than Canadian Utilities Ltd. It trades about 0.17 of its potential returns per unit of risk. Canadian Utilities Ltd is currently generating about 0.02 per unit of risk. If you would invest 162.00 in Arizona Metals Corp on September 1, 2024 and sell it today you would earn a total of 35.00 from holding Arizona Metals Corp or generate 21.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Arizona Metals Corp vs. Canadian Utilities Ltd
Performance |
| Timeline |
| Arizona Metals Corp |
| Canadian Utilities |
Arizona Metals and Canadian Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arizona Metals and Canadian Utilities
The main advantage of trading using opposite Arizona Metals and Canadian Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arizona Metals position performs unexpectedly, Canadian Utilities 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 Canadian Utilities will offset losses from the drop in Canadian Utilities' long position.| Arizona Metals vs. i 80 Gold Corp | Arizona Metals vs. Ressources Minieres Radisson | Arizona Metals vs. Amerigo Resources | Arizona Metals vs. Aris Gold Corp |
| Canadian Utilities vs. Altair Resources | Canadian Utilities vs. Arizona Metals Corp | Canadian Utilities vs. DRI Healthcare Trust | Canadian Utilities vs. Talon Metals Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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