Correlation Between American West and Aurelia Metals
Can any of the company-specific risk be diversified away by investing in both American West and Aurelia 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 American West and Aurelia Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American West Metals and Aurelia Metals, you can compare the effects of market volatilities on American West and Aurelia 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 American West with a short position of Aurelia Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American West and Aurelia Metals.
Diversification Opportunities for American West and Aurelia Metals
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and Aurelia is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding American West Metals and Aurelia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurelia Metals and American West 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 West Metals are associated (or correlated) with Aurelia Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurelia Metals has no effect on the direction of American West i.e., American West and Aurelia Metals go up and down completely randomly.
Pair Corralation between American West and Aurelia Metals
Assuming the 90 days trading horizon American West Metals is expected to under-perform the Aurelia Metals. But the stock apears to be less risky and, when comparing its historical volatility, American West Metals is 1.08 times less risky than Aurelia Metals. The stock trades about -0.4 of its potential returns per unit of risk. The Aurelia Metals is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Aurelia Metals on September 3, 2024 and sell it today you would lose (1.00) from holding Aurelia Metals or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American West Metals vs. Aurelia Metals
Performance |
| Timeline |
| American West Metals |
| Aurelia Metals |
American West and Aurelia Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American West and Aurelia Metals
The main advantage of trading using opposite American West and Aurelia Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American West position performs unexpectedly, Aurelia 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 Aurelia Metals will offset losses from the drop in Aurelia Metals' long position.| American West vs. Northern Star Resources | American West vs. Evolution Mining | American West vs. Bluescope Steel | American West vs. Aneka Tambang Tbk |
| Aurelia Metals vs. Northern Star Resources | Aurelia Metals vs. Evolution Mining | Aurelia Metals vs. Bluescope Steel | Aurelia Metals vs. Aneka Tambang Tbk |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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