Correlation Between American West and Patriot Battery
Can any of the company-specific risk be diversified away by investing in both American West and Patriot Battery 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 Patriot Battery 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 Patriot Battery Metals, you can compare the effects of market volatilities on American West and Patriot Battery 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 Patriot Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of American West and Patriot Battery.
Diversification Opportunities for American West and Patriot Battery
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Patriot is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American West Metals and Patriot Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patriot Battery 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 Patriot Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patriot Battery Metals has no effect on the direction of American West i.e., American West and Patriot Battery go up and down completely randomly.
Pair Corralation between American West and Patriot Battery
Assuming the 90 days trading horizon American West Metals is expected to generate 1.08 times more return on investment than Patriot Battery. However, American West is 1.08 times more volatile than Patriot Battery Metals. It trades about 0.02 of its potential returns per unit of risk. Patriot Battery Metals is currently generating about 0.0 per unit of risk. If you would invest 11.00 in American West Metals on August 26, 2024 and sell it today you would lose (4.40) from holding American West Metals or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
American West Metals vs. Patriot Battery Metals
Performance |
| Timeline |
| American West Metals |
| Patriot Battery Metals |
American West and Patriot Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American West and Patriot Battery
The main advantage of trading using opposite American West and Patriot Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American West position performs unexpectedly, Patriot Battery 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 Patriot Battery will offset losses from the drop in Patriot Battery's long position.| American West vs. Mach7 Technologies | American West vs. Super Retail Group | American West vs. RLF AgTech | American West vs. Infomedia |
| Patriot Battery vs. Air New Zealand | Patriot Battery vs. Stelar Metals | Patriot Battery vs. Aeon Metals | Patriot Battery vs. Alto Metals |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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