Correlation Between Ampleforth and St James
Can any of the company-specific risk be diversified away by investing in both Ampleforth and St James 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 Ampleforth and St James into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampleforth and St James Gold, you can compare the effects of market volatilities on Ampleforth and St James 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 Ampleforth with a short position of St James. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampleforth and St James.
Diversification Opportunities for Ampleforth and St James
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ampleforth and LRDJF is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and St James Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St James Gold and Ampleforth 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 Ampleforth are associated (or correlated) with St James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St James Gold has no effect on the direction of Ampleforth i.e., Ampleforth and St James go up and down completely randomly.
Pair Corralation between Ampleforth and St James
Assuming the 90 days trading horizon Ampleforth is expected to generate 2.93 times less return on investment than St James. But when comparing it to its historical volatility, Ampleforth is 1.34 times less risky than St James. It trades about 0.02 of its potential returns per unit of risk. St James Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7.44 in St James Gold on September 12, 2024 and sell it today you would lose (0.24) from holding St James Gold or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ampleforth vs. St James Gold
Performance |
| Timeline |
| Ampleforth |
| St James Gold |
Ampleforth and St James Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampleforth and St James
The main advantage of trading using opposite Ampleforth and St James positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampleforth position performs unexpectedly, St James 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 St James will offset losses from the drop in St James' long position.The idea behind Ampleforth and St James Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| St James vs. Puma Exploration | St James vs. Sixty North Gold | St James vs. Red Pine Exploration | St James vs. Grande Portage 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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