Correlation Between Avidian Gold and BTU Metals
Can any of the company-specific risk be diversified away by investing in both Avidian Gold and BTU Metals 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 Avidian Gold and BTU Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avidian Gold Corp and BTU Metals Corp, you can compare the effects of market volatilities on Avidian Gold and BTU Metals 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 Avidian Gold with a short position of BTU Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avidian Gold and BTU Metals.
Diversification Opportunities for Avidian Gold and BTU Metals
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avidian and BTU is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Avidian Gold Corp and BTU Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTU Metals Corp and Avidian Gold 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 Avidian Gold Corp are associated (or correlated) with BTU Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTU Metals Corp has no effect on the direction of Avidian Gold i.e., Avidian Gold and BTU Metals go up and down completely randomly.
Pair Corralation between Avidian Gold and BTU Metals
Assuming the 90 days horizon Avidian Gold Corp is expected to generate 1.58 times more return on investment than BTU Metals. However, Avidian Gold is 1.58 times more volatile than BTU Metals Corp. It trades about 0.03 of its potential returns per unit of risk. BTU Metals Corp is currently generating about 0.02 per unit of risk. If you would invest 17.00 in Avidian Gold Corp on September 1, 2024 and sell it today you would lose (7.74) from holding Avidian Gold Corp or give up 45.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Avidian Gold Corp vs. BTU Metals Corp
Performance |
| Timeline |
| Avidian Gold Corp |
| BTU Metals Corp |
Avidian Gold and BTU Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avidian Gold and BTU Metals
The main advantage of trading using opposite Avidian Gold and BTU Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avidian Gold position performs unexpectedly, BTU Metals 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 BTU Metals will offset losses from the drop in BTU Metals' long position.| Avidian Gold vs. Aurion Resources | Avidian Gold vs. Rio2 Limited | Avidian Gold vs. Palamina Corp | Avidian Gold vs. BTU Metals Corp |
| BTU Metals vs. Alaska Air Group | BTU Metals vs. Xtant Medical Holdings | BTU Metals vs. Westinghouse Air Brake | BTU Metals vs. AerSale 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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