Correlation Between Equity Metals and Arbor Metals
Can any of the company-specific risk be diversified away by investing in both Equity Metals 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 Equity Metals and Arbor Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Metals Corp and Arbor Metals Corp, you can compare the effects of market volatilities on Equity Metals 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 Equity Metals with a short position of Arbor Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Metals and Arbor Metals.
Diversification Opportunities for Equity Metals and Arbor Metals
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Equity and Arbor is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Equity Metals Corp 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 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 Corp 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 Equity Metals i.e., Equity Metals and Arbor Metals go up and down completely randomly.
Pair Corralation between Equity Metals and Arbor Metals
Assuming the 90 days trading horizon Equity Metals Corp is expected to generate 1.36 times more return on investment than Arbor Metals. However, Equity Metals is 1.36 times more volatile than Arbor Metals Corp. It trades about 0.04 of its potential returns per unit of risk. Arbor Metals Corp is currently generating about -0.06 per unit of risk. If you would invest 17.00 in Equity Metals Corp on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Equity Metals Corp or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Metals Corp vs. Arbor Metals Corp
Performance |
| Timeline |
| Equity Metals Corp |
| Arbor Metals Corp |
Equity Metals and Arbor Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Metals and Arbor Metals
The main advantage of trading using opposite Equity Metals and Arbor Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Metals 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.| Equity Metals vs. Arbor Metals Corp | Equity Metals vs. Intact Financial Corp | Equity Metals vs. First National Financial | Equity Metals vs. Olympia Financial Group |
| Arbor Metals vs. First Majestic Silver | Arbor Metals vs. Ivanhoe Energy | Arbor Metals vs. Orezone Gold Corp | Arbor Metals vs. Faraday Copper Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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