Correlation Between American Resources and Alpha Metallurgical
Can any of the company-specific risk be diversified away by investing in both American Resources and Alpha Metallurgical 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 Resources and Alpha Metallurgical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Resources Corp and Alpha Metallurgical Resources, you can compare the effects of market volatilities on American Resources and Alpha Metallurgical 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 Resources with a short position of Alpha Metallurgical. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Resources and Alpha Metallurgical.
Diversification Opportunities for American Resources and Alpha Metallurgical
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Alpha is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Resources Corp and Alpha Metallurgical Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Metallurgical and American 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 American Resources Corp are associated (or correlated) with Alpha Metallurgical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Metallurgical has no effect on the direction of American Resources i.e., American Resources and Alpha Metallurgical go up and down completely randomly.
Pair Corralation between American Resources and Alpha Metallurgical
Given the investment horizon of 90 days American Resources Corp is expected to generate 1.82 times more return on investment than Alpha Metallurgical. However, American Resources is 1.82 times more volatile than Alpha Metallurgical Resources. It trades about -0.01 of its potential returns per unit of risk. Alpha Metallurgical Resources is currently generating about -0.06 per unit of risk. If you would invest 145.00 in American Resources Corp on October 20, 2024 and sell it today you would lose (72.00) from holding American Resources Corp or give up 49.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Resources Corp vs. Alpha Metallurgical Resources
Performance |
| Timeline |
| American Resources Corp |
| Alpha Metallurgical |
American Resources and Alpha Metallurgical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Resources and Alpha Metallurgical
The main advantage of trading using opposite American Resources and Alpha Metallurgical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Resources position performs unexpectedly, Alpha Metallurgical 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 Alpha Metallurgical will offset losses from the drop in Alpha Metallurgical's long position.| American Resources vs. Westwater Resources | American Resources vs. Aqua Metals | American Resources vs. Pioneer Power Solutions | American Resources vs. Hall of Fame |
| Alpha Metallurgical vs. Warrior Met Coal | Alpha Metallurgical vs. Ramaco Resources | Alpha Metallurgical vs. SunCoke Energy | Alpha Metallurgical vs. American Resources Corp |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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