Correlation Between American Rare and Group 6
Can any of the company-specific risk be diversified away by investing in both American Rare and Group 6 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 Rare and Group 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Rare Earths and Group 6 Metals, you can compare the effects of market volatilities on American Rare and Group 6 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 Rare with a short position of Group 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Rare and Group 6.
Diversification Opportunities for American Rare and Group 6
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Group is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding American Rare Earths and Group 6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Group 6 Metals and American Rare 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 Rare Earths are associated (or correlated) with Group 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Group 6 Metals has no effect on the direction of American Rare i.e., American Rare and Group 6 go up and down completely randomly.
Pair Corralation between American Rare and Group 6
Assuming the 90 days trading horizon American Rare Earths is expected to generate 2.42 times more return on investment than Group 6. However, American Rare is 2.42 times more volatile than Group 6 Metals. It trades about 0.02 of its potential returns per unit of risk. Group 6 Metals is currently generating about 0.01 per unit of risk. If you would invest 27.00 in American Rare Earths on September 12, 2024 and sell it today you would earn a total of 0.00 from holding American Rare Earths or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
American Rare Earths vs. Group 6 Metals
Performance |
| Timeline |
| American Rare Earths |
| Group 6 Metals |
American Rare and Group 6 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Rare and Group 6
The main advantage of trading using opposite American Rare and Group 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Rare position performs unexpectedly, Group 6 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 Group 6 will offset losses from the drop in Group 6's long position.| American Rare vs. Australian Unity Office | American Rare vs. Australian Strategic Materials | American Rare vs. EP Financial Group | American Rare vs. Pioneer Credit |
| Group 6 vs. Perpetual Credit Income | Group 6 vs. Wt Financial Group | Group 6 vs. Hotel Property Investments | Group 6 vs. Bell Financial Group |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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