Correlation Between Ampleforth and Nine Mile
Can any of the company-specific risk be diversified away by investing in both Ampleforth and Nine Mile 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 Nine Mile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampleforth and Nine Mile Metals, you can compare the effects of market volatilities on Ampleforth and Nine Mile 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 Nine Mile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampleforth and Nine Mile.
Diversification Opportunities for Ampleforth and Nine Mile
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ampleforth and Nine is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and Nine Mile Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Mile Metals 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 Nine Mile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Mile Metals has no effect on the direction of Ampleforth i.e., Ampleforth and Nine Mile go up and down completely randomly.
Pair Corralation between Ampleforth and Nine Mile
Assuming the 90 days trading horizon Ampleforth is expected to generate 0.54 times more return on investment than Nine Mile. However, Ampleforth is 1.85 times less risky than Nine Mile. It trades about 0.03 of its potential returns per unit of risk. Nine Mile Metals is currently generating about -0.02 per unit of risk. If you would invest 132.00 in Ampleforth on September 3, 2024 and sell it today you would lose (1.00) from holding Ampleforth or give up 0.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.42% |
| Values | Daily Returns |
Ampleforth vs. Nine Mile Metals
Performance |
| Timeline |
| Ampleforth |
| Nine Mile Metals |
Ampleforth and Nine Mile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampleforth and Nine Mile
The main advantage of trading using opposite Ampleforth and Nine Mile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampleforth position performs unexpectedly, Nine Mile 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 Nine Mile will offset losses from the drop in Nine Mile's long position.The idea behind Ampleforth and Nine Mile Metals 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.| Nine Mile vs. Harmony Gold Mining | Nine Mile vs. SPACE | Nine Mile vs. T Rowe Price | Nine Mile vs. Ampleforth |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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