Correlation Between Eagle Plains and Avarone Metals
Can any of the company-specific risk be diversified away by investing in both Eagle Plains and Avarone 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 Eagle Plains and Avarone Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Plains Resources and Avarone Metals, you can compare the effects of market volatilities on Eagle Plains and Avarone 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 Eagle Plains with a short position of Avarone Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Plains and Avarone Metals.
Diversification Opportunities for Eagle Plains and Avarone Metals
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eagle and Avarone is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Plains Resources and Avarone Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avarone Metals and Eagle Plains 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 Eagle Plains Resources are associated (or correlated) with Avarone Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avarone Metals has no effect on the direction of Eagle Plains i.e., Eagle Plains and Avarone Metals go up and down completely randomly.
Pair Corralation between Eagle Plains and Avarone Metals
Assuming the 90 days horizon Eagle Plains Resources is expected to generate 0.72 times more return on investment than Avarone Metals. However, Eagle Plains Resources is 1.4 times less risky than Avarone Metals. It trades about -0.04 of its potential returns per unit of risk. Avarone Metals is currently generating about -0.21 per unit of risk. If you would invest 10.00 in Eagle Plains Resources on August 25, 2024 and sell it today you would lose (2.69) from holding Eagle Plains Resources or give up 26.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Plains Resources vs. Avarone Metals
Performance |
| Timeline |
| Eagle Plains Resources |
| Avarone Metals |
Eagle Plains and Avarone Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Plains and Avarone Metals
The main advantage of trading using opposite Eagle Plains and Avarone Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Plains position performs unexpectedly, Avarone 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 Avarone Metals will offset losses from the drop in Avarone Metals' long position.| Eagle Plains vs. Norra Metals Corp | Eagle Plains vs. E79 Resources Corp | Eagle Plains vs. Voltage Metals Corp | Eagle Plains vs. Cantex Mine Development |
| Avarone Metals vs. Aurelia Metals Limited | Avarone Metals vs. Adriatic Metals PLC | Avarone Metals vs. Progressive Planet Solutions | Avarone Metals vs. Almonty Industries |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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