Correlation Between Clean Air and Arctic Star
Can any of the company-specific risk be diversified away by investing in both Clean Air and Arctic Star 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 Clean Air and Arctic Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Air Metals and Arctic Star Exploration, you can compare the effects of market volatilities on Clean Air and Arctic Star 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 Clean Air with a short position of Arctic Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Air and Arctic Star.
Diversification Opportunities for Clean Air and Arctic Star
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clean and Arctic is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Clean Air Metals and Arctic Star Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Star Exploration and Clean Air 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 Clean Air Metals are associated (or correlated) with Arctic Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Star Exploration has no effect on the direction of Clean Air i.e., Clean Air and Arctic Star go up and down completely randomly.
Pair Corralation between Clean Air and Arctic Star
Assuming the 90 days horizon Clean Air is expected to generate 1.31 times less return on investment than Arctic Star. But when comparing it to its historical volatility, Clean Air Metals is 1.26 times less risky than Arctic Star. It trades about 0.05 of its potential returns per unit of risk. Arctic Star Exploration is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.72 in Arctic Star Exploration on September 1, 2024 and sell it today you would earn a total of 0.13 from holding Arctic Star Exploration or generate 18.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Clean Air Metals vs. Arctic Star Exploration
Performance |
| Timeline |
| Clean Air Metals |
| Arctic Star Exploration |
Clean Air and Arctic Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Air and Arctic Star
The main advantage of trading using opposite Clean Air and Arctic Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Air position performs unexpectedly, Arctic Star 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 Arctic Star will offset losses from the drop in Arctic Star's long position.| Clean Air vs. Alien Metals | Clean Air vs. Cartier Iron Corp | Clean Air vs. Arctic Star Exploration | Clean Air vs. Capella Minerals Limited |
| Arctic Star vs. Defiance Silver Corp | Arctic Star vs. HUMANA INC | Arctic Star vs. SCOR PK | Arctic Star vs. Aquagold International |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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