Correlation Between Decade Resources and Arbor Metals
Can any of the company-specific risk be diversified away by investing in both Decade Resources and Arbor Metals 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 Decade Resources and Arbor Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Decade Resources and Arbor Metals Corp, you can compare the effects of market volatilities on Decade Resources and Arbor Metals 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 Decade Resources with a short position of Arbor Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Decade Resources and Arbor Metals.
Diversification Opportunities for Decade Resources and Arbor Metals
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Decade and Arbor is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Decade Resources and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals Corp and Decade Resources 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 Decade Resources are associated (or correlated) with Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of Decade Resources i.e., Decade Resources and Arbor Metals go up and down completely randomly.
Pair Corralation between Decade Resources and Arbor Metals
Assuming the 90 days horizon Decade Resources is expected to under-perform the Arbor Metals. But the pink sheet apears to be less risky and, when comparing its historical volatility, Decade Resources is 9.06 times less risky than Arbor Metals. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Arbor Metals Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 75.00 in Arbor Metals Corp on September 3, 2024 and sell it today you would lose (50.00) from holding Arbor Metals Corp or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Decade Resources vs. Arbor Metals Corp
Performance |
| Timeline |
| Decade Resources |
| Arbor Metals Corp |
Decade Resources and Arbor Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Decade Resources and Arbor Metals
The main advantage of trading using opposite Decade Resources and Arbor Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Decade Resources position performs unexpectedly, Arbor Metals 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 Arbor Metals will offset losses from the drop in Arbor Metals' long position.| Decade Resources vs. Qubec Nickel Corp | Decade Resources vs. IGO Limited | Decade Resources vs. Avarone Metals | Decade Resources vs. Adriatic Metals PLC |
| Arbor Metals vs. Decade Resources | Arbor Metals vs. Silver Spruce Resources | Arbor Metals vs. Grid Metals Corp | Arbor Metals vs. Canada Rare Earth |
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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