Correlation Between Archrock and North Bay
Can any of the company-specific risk be diversified away by investing in both Archrock and North Bay 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 Archrock and North Bay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Archrock and North Bay Resources, you can compare the effects of market volatilities on Archrock and North Bay 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 Archrock with a short position of North Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Archrock and North Bay.
Diversification Opportunities for Archrock and North Bay
Very good diversification
The 3 months correlation between Archrock and North is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Archrock and North Bay Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Bay Resources and Archrock 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 Archrock are associated (or correlated) with North Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Bay Resources has no effect on the direction of Archrock i.e., Archrock and North Bay go up and down completely randomly.
Pair Corralation between Archrock and North Bay
Given the investment horizon of 90 days Archrock is expected to generate 2.62 times less return on investment than North Bay. But when comparing it to its historical volatility, Archrock is 5.23 times less risky than North Bay. It trades about 0.19 of its potential returns per unit of risk. North Bay Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.07 in North Bay Resources on November 2, 2024 and sell it today you would earn a total of 0.04 from holding North Bay Resources or generate 57.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Archrock vs. North Bay Resources
Performance |
| Timeline |
| Archrock |
| North Bay Resources |
Archrock and North Bay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Archrock and North Bay
The main advantage of trading using opposite Archrock and North Bay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Archrock position performs unexpectedly, North Bay 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 North Bay will offset losses from the drop in North Bay's long position.| Archrock vs. ProPetro Holding Corp | Archrock vs. Select Energy Services | Archrock vs. USA Compression Partners | Archrock vs. Par Pacific Holdings |
| North Bay vs. Diamond Fields Resources | North Bay vs. EnviroGold Global Limited | North Bay vs. Gemfields Group Limited | North Bay vs. Pacific Ridge Exploration |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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