Correlation Between American West and Aeon Metals
Can any of the company-specific risk be diversified away by investing in both American West and Aeon 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 Aeon 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 Aeon Metals, you can compare the effects of market volatilities on American West and Aeon 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 Aeon Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American West and Aeon Metals.
Diversification Opportunities for American West and Aeon Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Aeon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American West Metals and Aeon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeon 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 Aeon Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeon Metals has no effect on the direction of American West i.e., American West and Aeon Metals go up and down completely randomly.
Pair Corralation between American West and Aeon Metals
Assuming the 90 days trading horizon American West Metals is expected to under-perform the Aeon Metals. But the stock apears to be less risky and, when comparing its historical volatility, American West Metals is 1.21 times less risky than Aeon Metals. The stock trades about 0.0 of its potential returns per unit of risk. The Aeon Metals is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1.70 in Aeon Metals on August 28, 2024 and sell it today you would lose (1.20) from holding Aeon Metals or give up 70.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
American West Metals vs. Aeon Metals
Performance |
| Timeline |
| American West Metals |
| Aeon Metals |
American West and Aeon Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American West and Aeon Metals
The main advantage of trading using opposite American West and Aeon Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American West position performs unexpectedly, Aeon 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 Aeon Metals will offset losses from the drop in Aeon Metals' long position.| American West vs. Northern Star Resources | American West vs. Evolution Mining | American West vs. Bluescope Steel | American West vs. Sandfire Resources NL |
| Aeon Metals vs. Macquarie Bank Limited | Aeon Metals vs. Perpetual Credit Income | Aeon Metals vs. Lendlease Group | Aeon Metals vs. Magellan 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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