Correlation Between Falcon Energy and Alliance Mining
Can any of the company-specific risk be diversified away by investing in both Falcon Energy and Alliance Mining 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 Falcon Energy and Alliance Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Falcon Energy Materials and Alliance Mining Corp, you can compare the effects of market volatilities on Falcon Energy and Alliance Mining 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 Falcon Energy with a short position of Alliance Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falcon Energy and Alliance Mining.
Diversification Opportunities for Falcon Energy and Alliance Mining
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Falcon and Alliance is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and Alliance Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Mining Corp and Falcon Energy 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 Falcon Energy Materials are associated (or correlated) with Alliance Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Mining Corp has no effect on the direction of Falcon Energy i.e., Falcon Energy and Alliance Mining go up and down completely randomly.
Pair Corralation between Falcon Energy and Alliance Mining
Assuming the 90 days trading horizon Falcon Energy is expected to generate 2.1 times less return on investment than Alliance Mining. But when comparing it to its historical volatility, Falcon Energy Materials is 1.8 times less risky than Alliance Mining. It trades about 0.07 of its potential returns per unit of risk. Alliance Mining Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7.00 in Alliance Mining Corp on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Alliance Mining Corp or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Falcon Energy Materials vs. Alliance Mining Corp
Performance |
| Timeline |
| Falcon Energy Materials |
| Alliance Mining Corp |
Falcon Energy and Alliance Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Falcon Energy and Alliance Mining
The main advantage of trading using opposite Falcon Energy and Alliance Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falcon Energy position performs unexpectedly, Alliance Mining 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 Alliance Mining will offset losses from the drop in Alliance Mining's long position.| Falcon Energy vs. Maple Peak Investments | Falcon Energy vs. 2028 Investment Grade | Falcon Energy vs. Solid Impact Investments | Falcon Energy vs. Canaf Investments |
| Alliance Mining vs. Ocumetics Technology Corp | Alliance Mining vs. Sparx Technology | Alliance Mining vs. Questor Technology | Alliance Mining vs. Totally Hip Technologies |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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