Correlation Between Commercial Metals and Aris Mining
Can any of the company-specific risk be diversified away by investing in both Commercial Metals and Aris Mining 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 Commercial Metals and Aris Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Metals and Aris Mining, you can compare the effects of market volatilities on Commercial Metals and Aris Mining 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 Commercial Metals with a short position of Aris Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Metals and Aris Mining.
Diversification Opportunities for Commercial Metals and Aris Mining
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and Aris is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Metals and Aris Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aris Mining and Commercial Metals 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 Commercial Metals are associated (or correlated) with Aris Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aris Mining has no effect on the direction of Commercial Metals i.e., Commercial Metals and Aris Mining go up and down completely randomly.
Pair Corralation between Commercial Metals and Aris Mining
Considering the 90-day investment horizon Commercial Metals is expected to generate 1.65 times less return on investment than Aris Mining. But when comparing it to its historical volatility, Commercial Metals is 1.51 times less risky than Aris Mining. It trades about 0.05 of its potential returns per unit of risk. Aris Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 311.00 in Aris Mining on August 28, 2024 and sell it today you would earn a total of 100.00 from holding Aris Mining or generate 32.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Metals vs. Aris Mining
Performance |
| Timeline |
| Commercial Metals |
| Aris Mining |
Commercial Metals and Aris Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Metals and Aris Mining
The main advantage of trading using opposite Commercial Metals and Aris Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Metals position performs unexpectedly, Aris Mining 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 Aris Mining will offset losses from the drop in Aris Mining's long position.The idea behind Commercial Metals and Aris Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aris Mining vs. Bill Com Holdings | Aris Mining vs. Boston Beer | Aris Mining vs. VirnetX Holding Corp | Aris Mining vs. Fomento Economico Mexicano |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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