Correlation Between Diamond Fields and American Sierra
Can any of the company-specific risk be diversified away by investing in both Diamond Fields and American Sierra 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 Diamond Fields and American Sierra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Fields Resources and American Sierra Gold, you can compare the effects of market volatilities on Diamond Fields and American Sierra 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 Diamond Fields with a short position of American Sierra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Fields and American Sierra.
Diversification Opportunities for Diamond Fields and American Sierra
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diamond and American is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Fields Resources and American Sierra Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Sierra Gold and Diamond Fields 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 Diamond Fields Resources are associated (or correlated) with American Sierra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Sierra Gold has no effect on the direction of Diamond Fields i.e., Diamond Fields and American Sierra go up and down completely randomly.
Pair Corralation between Diamond Fields and American Sierra
Assuming the 90 days horizon Diamond Fields Resources is expected to generate 2.46 times more return on investment than American Sierra. However, Diamond Fields is 2.46 times more volatile than American Sierra Gold. It trades about 0.08 of its potential returns per unit of risk. American Sierra Gold is currently generating about 0.07 per unit of risk. If you would invest 5.00 in Diamond Fields Resources on September 12, 2024 and sell it today you would lose (3.38) from holding Diamond Fields Resources or give up 67.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Diamond Fields Resources vs. American Sierra Gold
Performance |
| Timeline |
| Diamond Fields Resources |
| American Sierra Gold |
Diamond Fields and American Sierra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Fields and American Sierra
The main advantage of trading using opposite Diamond Fields and American Sierra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Fields position performs unexpectedly, American Sierra 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 American Sierra will offset losses from the drop in American Sierra's long position.| Diamond Fields vs. Gemfields Group Limited | Diamond Fields vs. Star Royalties | Diamond Fields vs. Defiance Silver Corp | Diamond Fields vs. GoGold Resources |
| American Sierra vs. Gold79 Mines | American Sierra vs. Arctic Star Exploration | American Sierra vs. Arras Minerals Corp | American Sierra vs. American Creek Resources |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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