Correlation Between Aurania Resources and American Sierra
Can any of the company-specific risk be diversified away by investing in both Aurania Resources and American Sierra 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 Aurania Resources and American Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurania Resources and American Sierra Gold, you can compare the effects of market volatilities on Aurania Resources and American Sierra 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 Aurania Resources with a short position of American Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurania Resources and American Sierra.
Diversification Opportunities for Aurania Resources and American Sierra
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aurania and American is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aurania Resources and American Sierra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Sierra Gold and Aurania 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 Aurania Resources are associated (or correlated) with American Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Sierra Gold has no effect on the direction of Aurania Resources i.e., Aurania Resources and American Sierra go up and down completely randomly.
Pair Corralation between Aurania Resources and American Sierra
Assuming the 90 days horizon Aurania Resources is expected to generate 4.97 times less return on investment than American Sierra. But when comparing it to its historical volatility, Aurania Resources is 2.69 times less risky than American Sierra. It trades about 0.04 of its potential returns per unit of risk. American Sierra Gold is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.30 in American Sierra Gold on August 29, 2024 and sell it today you would lose (1.90) from holding American Sierra Gold or give up 82.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurania Resources vs. American Sierra Gold
Performance |
| Timeline |
| Aurania Resources |
| American Sierra Gold |
Aurania Resources and American Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurania Resources and American Sierra
The main advantage of trading using opposite Aurania Resources and American Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurania Resources position performs unexpectedly, American Sierra 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 American Sierra will offset losses from the drop in American Sierra's long position.| Aurania Resources vs. Morningstar Unconstrained Allocation | Aurania Resources vs. High Yield Municipal Fund | Aurania Resources vs. Knife River | Aurania Resources vs. Klckner Co SE |
| American Sierra vs. Morningstar Unconstrained Allocation | American Sierra vs. High Yield Municipal Fund | American Sierra vs. Knife River | American Sierra vs. Klckner Co SE |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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