Correlation Between Black Iron and Amarc Resources
Can any of the company-specific risk be diversified away by investing in both Black Iron and Amarc Resources 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 Black Iron and Amarc Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Iron and Amarc Resources, you can compare the effects of market volatilities on Black Iron and Amarc Resources 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 Black Iron with a short position of Amarc Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Iron and Amarc Resources.
Diversification Opportunities for Black Iron and Amarc Resources
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Black and Amarc is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Black Iron and Amarc Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarc Resources and Black Iron 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 Black Iron are associated (or correlated) with Amarc Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarc Resources has no effect on the direction of Black Iron i.e., Black Iron and Amarc Resources go up and down completely randomly.
Pair Corralation between Black Iron and Amarc Resources
Assuming the 90 days horizon Black Iron is expected to generate 4.69 times more return on investment than Amarc Resources. However, Black Iron is 4.69 times more volatile than Amarc Resources. It trades about 0.17 of its potential returns per unit of risk. Amarc Resources is currently generating about -0.05 per unit of risk. If you would invest 3.60 in Black Iron on September 1, 2024 and sell it today you would earn a total of 2.20 from holding Black Iron or generate 61.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Iron vs. Amarc Resources
Performance |
| Timeline |
| Black Iron |
| Amarc Resources |
Black Iron and Amarc Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Iron and Amarc Resources
The main advantage of trading using opposite Black Iron and Amarc Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Iron position performs unexpectedly, Amarc Resources 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 Amarc Resources will offset losses from the drop in Amarc Resources' long position.| Black Iron vs. South32 Limited | Black Iron vs. NioCorp Developments Ltd | Black Iron vs. HUMANA INC | Black Iron vs. SCOR PK |
| Amarc Resources vs. Durango Resources | Amarc Resources vs. Avarone Metals | Amarc Resources vs. Pampa Metals | Amarc Resources vs. Sun Summit Minerals |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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