Correlation Between AGRICULTBK HADR25 and SITKA GOLD
Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR25 and SITKA GOLD 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 AGRICULTBK HADR25 and SITKA GOLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICULTBK HADR25 YC and SITKA GOLD P, you can compare the effects of market volatilities on AGRICULTBK HADR25 and SITKA GOLD 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 AGRICULTBK HADR25 with a short position of SITKA GOLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR25 and SITKA GOLD.
Diversification Opportunities for AGRICULTBK HADR25 and SITKA GOLD
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGRICULTBK and SITKA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and SITKA GOLD P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SITKA GOLD P and AGRICULTBK HADR25 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 AGRICULTBK HADR25 YC are associated (or correlated) with SITKA GOLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SITKA GOLD P has no effect on the direction of AGRICULTBK HADR25 i.e., AGRICULTBK HADR25 and SITKA GOLD go up and down completely randomly.
Pair Corralation between AGRICULTBK HADR25 and SITKA GOLD
Assuming the 90 days trading horizon AGRICULTBK HADR25 is expected to generate 2.92 times less return on investment than SITKA GOLD. But when comparing it to its historical volatility, AGRICULTBK HADR25 YC is 3.04 times less risky than SITKA GOLD. It trades about 0.08 of its potential returns per unit of risk. SITKA GOLD P is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11.00 in SITKA GOLD P on August 29, 2024 and sell it today you would earn a total of 14.00 from holding SITKA GOLD P or generate 127.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
AGRICULTBK HADR25 YC vs. SITKA GOLD P
Performance |
| Timeline |
| AGRICULTBK HADR25 |
| SITKA GOLD P |
AGRICULTBK HADR25 and SITKA GOLD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICULTBK HADR25 and SITKA GOLD
The main advantage of trading using opposite AGRICULTBK HADR25 and SITKA GOLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR25 position performs unexpectedly, SITKA GOLD 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 SITKA GOLD will offset losses from the drop in SITKA GOLD's long position.| AGRICULTBK HADR25 vs. BJs Restaurants | AGRICULTBK HADR25 vs. JD SPORTS FASH | AGRICULTBK HADR25 vs. Treasury Wine Estates | AGRICULTBK HADR25 vs. Playa Hotels Resorts |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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