Correlation Between North American and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both North American and AKITA Drilling 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 North American and AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and AKITA Drilling, you can compare the effects of market volatilities on North American and AKITA Drilling 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 North American with a short position of AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and AKITA Drilling.
Diversification Opportunities for North American and AKITA Drilling
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and AKITA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and North American 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 North American Financial are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of North American i.e., North American and AKITA Drilling go up and down completely randomly.
Pair Corralation between North American and AKITA Drilling
Assuming the 90 days trading horizon North American Financial is expected to generate 0.75 times more return on investment than AKITA Drilling. However, North American Financial is 1.33 times less risky than AKITA Drilling. It trades about 0.07 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.01 per unit of risk. If you would invest 406.00 in North American Financial on September 3, 2024 and sell it today you would earn a total of 346.00 from holding North American Financial or generate 85.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Financial vs. AKITA Drilling
Performance |
| Timeline |
| North American Financial |
| AKITA Drilling |
North American and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and AKITA Drilling
The main advantage of trading using opposite North American and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, AKITA Drilling 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 AKITA Drilling will offset losses from the drop in AKITA Drilling's long position.| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |