Correlation Between American Sierra and Arctic Star
Can any of the company-specific risk be diversified away by investing in both American Sierra and Arctic Star 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 Sierra and Arctic Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Sierra Gold and Arctic Star Exploration, you can compare the effects of market volatilities on American Sierra and Arctic Star 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 Sierra with a short position of Arctic Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Sierra and Arctic Star.
Diversification Opportunities for American Sierra and Arctic Star
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Arctic is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding American Sierra Gold and Arctic Star Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Star Exploration and American Sierra 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 Sierra Gold are associated (or correlated) with Arctic Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Star Exploration has no effect on the direction of American Sierra i.e., American Sierra and Arctic Star go up and down completely randomly.
Pair Corralation between American Sierra and Arctic Star
Given the investment horizon of 90 days American Sierra Gold is expected to generate 2.34 times more return on investment than Arctic Star. However, American Sierra is 2.34 times more volatile than Arctic Star Exploration. It trades about 0.07 of its potential returns per unit of risk. Arctic Star Exploration is currently generating about 0.03 per unit of risk. If you would invest 2.30 in American Sierra Gold on August 29, 2024 and sell it today you would lose (1.90) from holding American Sierra Gold or give up 82.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Sierra Gold vs. Arctic Star Exploration
Performance |
| Timeline |
| American Sierra Gold |
| Arctic Star Exploration |
American Sierra and Arctic Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Sierra and Arctic Star
The main advantage of trading using opposite American Sierra and Arctic Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Sierra position performs unexpectedly, Arctic Star 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 Arctic Star will offset losses from the drop in Arctic Star's long position.| American Sierra vs. Morningstar Unconstrained Allocation | American Sierra vs. High Yield Municipal Fund | American Sierra vs. Knife River | American Sierra vs. Klckner Co SE |
| Arctic Star vs. American Sierra Gold | Arctic Star vs. Aurania Resources | Arctic Star vs. Alien Metals | Arctic Star vs. Gold79 Mines |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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