Correlation Between Aurelia Metals and American West
Can any of the company-specific risk be diversified away by investing in both Aurelia Metals and American West 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 Aurelia Metals and American West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurelia Metals and American West Metals, you can compare the effects of market volatilities on Aurelia Metals and American West 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 Aurelia Metals with a short position of American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurelia Metals and American West.
Diversification Opportunities for Aurelia Metals and American West
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aurelia and American is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Aurelia Metals and American West Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American West Metals and Aurelia 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 Aurelia Metals are associated (or correlated) with American West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American West Metals has no effect on the direction of Aurelia Metals i.e., Aurelia Metals and American West go up and down completely randomly.
Pair Corralation between Aurelia Metals and American West
Assuming the 90 days trading horizon Aurelia Metals is expected to generate 0.99 times more return on investment than American West. However, Aurelia Metals is 1.01 times less risky than American West. It trades about 0.04 of its potential returns per unit of risk. American West Metals is currently generating about -0.25 per unit of risk. If you would invest 16.00 in Aurelia Metals on September 3, 2024 and sell it today you would earn a total of 1.00 from holding Aurelia Metals or generate 6.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurelia Metals vs. American West Metals
Performance |
| Timeline |
| Aurelia Metals |
| American West Metals |
Aurelia Metals and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurelia Metals and American West
The main advantage of trading using opposite Aurelia Metals and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurelia Metals position performs unexpectedly, American West 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 American West will offset losses from the drop in American West's long position.| Aurelia Metals vs. Northern Star Resources | Aurelia Metals vs. Evolution Mining | Aurelia Metals vs. Bluescope Steel | Aurelia Metals vs. Aneka Tambang Tbk |
| American West vs. Northern Star Resources | American West vs. Evolution Mining | American West vs. Bluescope Steel | American West vs. Aneka Tambang Tbk |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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