Correlation Between Bald Eagle and Tree Island
Can any of the company-specific risk be diversified away by investing in both Bald Eagle and Tree Island 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 Bald Eagle and Tree Island into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bald Eagle Gold and Tree Island Steel, you can compare the effects of market volatilities on Bald Eagle and Tree Island 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 Bald Eagle with a short position of Tree Island. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bald Eagle and Tree Island.
Diversification Opportunities for Bald Eagle and Tree Island
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bald and Tree is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bald Eagle Gold and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel and Bald Eagle 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 Bald Eagle Gold are associated (or correlated) with Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of Bald Eagle i.e., Bald Eagle and Tree Island go up and down completely randomly.
Pair Corralation between Bald Eagle and Tree Island
Assuming the 90 days horizon Bald Eagle Gold is expected to generate 3.32 times more return on investment than Tree Island. However, Bald Eagle is 3.32 times more volatile than Tree Island Steel. It trades about 0.07 of its potential returns per unit of risk. Tree Island Steel is currently generating about 0.01 per unit of risk. If you would invest 21.00 in Bald Eagle Gold on August 30, 2024 and sell it today you would earn a total of 37.00 from holding Bald Eagle Gold or generate 176.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Bald Eagle Gold vs. Tree Island Steel
Performance |
| Timeline |
| Bald Eagle Gold |
| Tree Island Steel |
Bald Eagle and Tree Island Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bald Eagle and Tree Island
The main advantage of trading using opposite Bald Eagle and Tree Island positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bald Eagle position performs unexpectedly, Tree Island 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 Tree Island will offset losses from the drop in Tree Island's long position.| Bald Eagle vs. Quorum Information Technologies | Bald Eagle vs. Algonquin Power Utilities | Bald Eagle vs. Datable Technology Corp | Bald Eagle vs. Rogers Communications |
| Tree Island vs. First Majestic Silver | Tree Island vs. Ivanhoe Energy | Tree Island vs. Orezone Gold Corp | Tree Island vs. Faraday Copper 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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