Correlation Between Argo Investments and Aurizon Holdings
Can any of the company-specific risk be diversified away by investing in both Argo Investments and Aurizon Holdings 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 Argo Investments and Aurizon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Investments and Aurizon Holdings, you can compare the effects of market volatilities on Argo Investments and Aurizon Holdings 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 Argo Investments with a short position of Aurizon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Investments and Aurizon Holdings.
Diversification Opportunities for Argo Investments and Aurizon Holdings
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Argo and Aurizon is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Argo Investments and Aurizon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurizon Holdings and Argo Investments 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 Argo Investments are associated (or correlated) with Aurizon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurizon Holdings has no effect on the direction of Argo Investments i.e., Argo Investments and Aurizon Holdings go up and down completely randomly.
Pair Corralation between Argo Investments and Aurizon Holdings
Assuming the 90 days trading horizon Argo Investments is expected to generate 0.67 times more return on investment than Aurizon Holdings. However, Argo Investments is 1.49 times less risky than Aurizon Holdings. It trades about 0.34 of its potential returns per unit of risk. Aurizon Holdings is currently generating about -0.03 per unit of risk. If you would invest 876.00 in Argo Investments on September 2, 2024 and sell it today you would earn a total of 38.00 from holding Argo Investments or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argo Investments vs. Aurizon Holdings
Performance |
| Timeline |
| Argo Investments |
| Aurizon Holdings |
Argo Investments and Aurizon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Investments and Aurizon Holdings
The main advantage of trading using opposite Argo Investments and Aurizon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Investments position performs unexpectedly, Aurizon Holdings 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 Aurizon Holdings will offset losses from the drop in Aurizon Holdings' long position.| Argo Investments vs. WA1 Resources | Argo Investments vs. Predictive Discovery | Argo Investments vs. Cooper Metals | Argo Investments vs. OD6 Metals |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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