Correlation Between Equity Metals and Aurania Resources
Can any of the company-specific risk be diversified away by investing in both Equity Metals and Aurania Resources 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 Equity Metals and Aurania Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Metals and Aurania Resources, you can compare the effects of market volatilities on Equity Metals and Aurania Resources 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 Equity Metals with a short position of Aurania Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Metals and Aurania Resources.
Diversification Opportunities for Equity Metals and Aurania Resources
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Equity and Aurania is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Equity Metals and Aurania Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurania Resources and Equity 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 Equity Metals are associated (or correlated) with Aurania Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurania Resources has no effect on the direction of Equity Metals i.e., Equity Metals and Aurania Resources go up and down completely randomly.
Pair Corralation between Equity Metals and Aurania Resources
Assuming the 90 days horizon Equity Metals is expected to generate 1.0 times more return on investment than Aurania Resources. However, Equity Metals is 1.0 times less risky than Aurania Resources. It trades about 0.03 of its potential returns per unit of risk. Aurania Resources is currently generating about 0.01 per unit of risk. If you would invest 14.00 in Equity Metals on November 27, 2024 and sell it today you would earn a total of 0.00 from holding Equity Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Metals vs. Aurania Resources
Performance |
| Timeline |
| Equity Metals |
| Aurania Resources |
Equity Metals and Aurania Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Metals and Aurania Resources
The main advantage of trading using opposite Equity Metals and Aurania Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Metals position performs unexpectedly, Aurania Resources 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 Aurania Resources will offset losses from the drop in Aurania Resources' long position.| Equity Metals vs. Sierra Madre Gold | Equity Metals vs. Silver Wolf Exploration | Equity Metals vs. Western Alaska Minerals | Equity Metals vs. Summa Silver Corp |
| Aurania Resources vs. One Group Hospitality | Aurania Resources vs. Summit Hotel Properties | Aurania Resources vs. Analog Devices | Aurania Resources vs. Aviat Networks |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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