Correlation Between Evolution Mining and American West
Can any of the company-specific risk be diversified away by investing in both Evolution Mining and American West 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 Evolution Mining and American West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolution Mining and American West Metals, you can compare the effects of market volatilities on Evolution Mining and American West 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 Evolution Mining with a short position of American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolution Mining and American West.
Diversification Opportunities for Evolution Mining and American West
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Evolution and American is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Evolution Mining and American West Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American West Metals and Evolution Mining 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 Evolution Mining are associated (or correlated) with American West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American West Metals has no effect on the direction of Evolution Mining i.e., Evolution Mining and American West go up and down completely randomly.
Pair Corralation between Evolution Mining and American West
Assuming the 90 days trading horizon Evolution Mining is expected to generate 3.38 times less return on investment than American West. But when comparing it to its historical volatility, Evolution Mining is 3.05 times less risky than American West. It trades about 0.04 of its potential returns per unit of risk. American West Metals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5.70 in American West Metals on August 29, 2024 and sell it today you would earn a total of 0.80 from holding American West Metals or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Evolution Mining vs. American West Metals
Performance |
| Timeline |
| Evolution Mining |
| American West Metals |
Evolution Mining and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Evolution Mining and American West
The main advantage of trading using opposite Evolution Mining and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolution Mining position performs unexpectedly, American West 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 West will offset losses from the drop in American West's long position.| Evolution Mining vs. Credit Clear | Evolution Mining vs. Insignia Financial | Evolution Mining vs. Westpac Banking | Evolution Mining vs. Prime Financial Group |
| American West vs. Northern Star Resources | American West vs. Evolution Mining | American West vs. Bluescope Steel | American West vs. Sandfire Resources NL |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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