Correlation Between American Resources and SunCoke Energy
Can any of the company-specific risk be diversified away by investing in both American Resources and SunCoke 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 American Resources and SunCoke Energy 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 SunCoke Energy, you can compare the effects of market volatilities on American Resources and SunCoke 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 American Resources with a short position of SunCoke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Resources and SunCoke Energy.
Diversification Opportunities for American Resources and SunCoke Energy
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and SunCoke is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Resources Corp and SunCoke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCoke Energy 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 SunCoke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunCoke Energy has no effect on the direction of American Resources i.e., American Resources and SunCoke Energy go up and down completely randomly.
Pair Corralation between American Resources and SunCoke Energy
Given the investment horizon of 90 days American Resources is expected to generate 3.95 times less return on investment than SunCoke Energy. In addition to that, American Resources is 1.43 times more volatile than SunCoke Energy. It trades about 0.07 of its total potential returns per unit of risk. SunCoke Energy is currently generating about 0.39 per unit of volatility. If you would invest 837.00 in SunCoke Energy on August 23, 2024 and sell it today you would earn a total of 425.00 from holding SunCoke Energy or generate 50.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Resources Corp vs. SunCoke Energy
Performance |
| Timeline |
| American Resources Corp |
| SunCoke Energy |
American Resources and SunCoke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Resources and SunCoke Energy
The main advantage of trading using opposite American Resources and SunCoke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Resources position performs unexpectedly, SunCoke 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 SunCoke Energy will offset losses from the drop in SunCoke Energy'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 |
| SunCoke Energy vs. Warrior Met Coal | SunCoke Energy vs. Arch Resources | SunCoke Energy vs. Alpha Metallurgical Resources | SunCoke Energy 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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