Correlation Between Anfield Resources and Alligator Energy
Can any of the company-specific risk be diversified away by investing in both Anfield Resources and Alligator Energy 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 Anfield Resources and Alligator Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anfield Resources and Alligator Energy Limited, you can compare the effects of market volatilities on Anfield Resources and Alligator Energy 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 Anfield Resources with a short position of Alligator Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anfield Resources and Alligator Energy.
Diversification Opportunities for Anfield Resources and Alligator Energy
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Anfield and Alligator is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Anfield Resources and Alligator Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alligator Energy and Anfield Resources 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 Anfield Resources are associated (or correlated) with Alligator Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alligator Energy has no effect on the direction of Anfield Resources i.e., Anfield Resources and Alligator Energy go up and down completely randomly.
Pair Corralation between Anfield Resources and Alligator Energy
Assuming the 90 days horizon Anfield Resources is expected to generate 1.5 times more return on investment than Alligator Energy. However, Anfield Resources is 1.5 times more volatile than Alligator Energy Limited. It trades about -0.04 of its potential returns per unit of risk. Alligator Energy Limited is currently generating about -0.1 per unit of risk. If you would invest 9.00 in Anfield Resources on August 29, 2024 and sell it today you would lose (1.00) from holding Anfield Resources or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anfield Resources vs. Alligator Energy Limited
Performance |
| Timeline |
| Anfield Resources |
| Alligator Energy |
Anfield Resources and Alligator Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anfield Resources and Alligator Energy
The main advantage of trading using opposite Anfield Resources and Alligator Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anfield Resources position performs unexpectedly, Alligator Energy 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 Alligator Energy will offset losses from the drop in Alligator Energy's long position.| Anfield Resources vs. Petroleo Brasileiro Petrobras | Anfield Resources vs. Equinor ASA ADR | Anfield Resources vs. Eni SpA ADR | Anfield Resources vs. YPF Sociedad Anonima |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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