Correlation Between American Eagle and Tectonic Metals
Can any of the company-specific risk be diversified away by investing in both American Eagle and Tectonic Metals 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 American Eagle and Tectonic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Eagle Gold and Tectonic Metals, you can compare the effects of market volatilities on American Eagle and Tectonic Metals 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 American Eagle with a short position of Tectonic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Eagle and Tectonic Metals.
Diversification Opportunities for American Eagle and Tectonic Metals
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Tectonic is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding American Eagle Gold and Tectonic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tectonic Metals and American Eagle 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 American Eagle Gold are associated (or correlated) with Tectonic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tectonic Metals has no effect on the direction of American Eagle i.e., American Eagle and Tectonic Metals go up and down completely randomly.
Pair Corralation between American Eagle and Tectonic Metals
Assuming the 90 days horizon American Eagle is expected to generate 1.27 times less return on investment than Tectonic Metals. In addition to that, American Eagle is 1.19 times more volatile than Tectonic Metals. It trades about 0.15 of its total potential returns per unit of risk. Tectonic Metals is currently generating about 0.23 per unit of volatility. If you would invest 3.23 in Tectonic Metals on November 27, 2024 and sell it today you would earn a total of 0.62 from holding Tectonic Metals or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Eagle Gold vs. Tectonic Metals
Performance |
| Timeline |
| American Eagle Gold |
| Tectonic Metals |
American Eagle and Tectonic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Eagle and Tectonic Metals
The main advantage of trading using opposite American Eagle and Tectonic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Eagle position performs unexpectedly, Tectonic Metals 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 Tectonic Metals will offset losses from the drop in Tectonic Metals' long position.| American Eagle vs. Minnova Corp | American Eagle vs. Blue Star Gold | American Eagle vs. Advance Gold Corp | American Eagle vs. Argo Gold |
| Tectonic Metals vs. Red Pine Exploration | Tectonic Metals vs. Grande Portage Resources | Tectonic Metals vs. Puma Exploration | Tectonic Metals vs. Aurion Resources |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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