Correlation Between Aclara Resources and New Stratus
Can any of the company-specific risk be diversified away by investing in both Aclara Resources and New Stratus 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 Aclara Resources and New Stratus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aclara Resources and New Stratus Energy, you can compare the effects of market volatilities on Aclara Resources and New Stratus 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 Aclara Resources with a short position of New Stratus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aclara Resources and New Stratus.
Diversification Opportunities for Aclara Resources and New Stratus
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aclara and New is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aclara Resources and New Stratus Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Stratus Energy and Aclara 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 Aclara Resources are associated (or correlated) with New Stratus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Stratus Energy has no effect on the direction of Aclara Resources i.e., Aclara Resources and New Stratus go up and down completely randomly.
Pair Corralation between Aclara Resources and New Stratus
Assuming the 90 days trading horizon Aclara Resources is expected to generate 32.03 times less return on investment than New Stratus. But when comparing it to its historical volatility, Aclara Resources is 1.45 times less risky than New Stratus. It trades about 0.02 of its potential returns per unit of risk. New Stratus Energy is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 46.00 in New Stratus Energy on November 27, 2024 and sell it today you would earn a total of 18.00 from holding New Stratus Energy or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aclara Resources vs. New Stratus Energy
Performance |
| Timeline |
| Aclara Resources |
| New Stratus Energy |
Aclara Resources and New Stratus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aclara Resources and New Stratus
The main advantage of trading using opposite Aclara Resources and New Stratus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aclara Resources position performs unexpectedly, New Stratus 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 New Stratus will offset losses from the drop in New Stratus' long position.The idea behind Aclara Resources and New Stratus Energy 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.| New Stratus vs. Arrow Exploration Corp | New Stratus vs. Southern Energy Corp | New Stratus vs. TAG Oil | New Stratus vs. Hemisphere Energy |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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