Correlation Between Group 6 and American West
Can any of the company-specific risk be diversified away by investing in both Group 6 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 Group 6 and American West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 6 Metals and American West Metals, you can compare the effects of market volatilities on Group 6 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 Group 6 with a short position of American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 6 and American West.
Diversification Opportunities for Group 6 and American West
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Group and American is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Group 6 Metals 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 Group 6 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 Group 6 Metals 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 Group 6 i.e., Group 6 and American West go up and down completely randomly.
Pair Corralation between Group 6 and American West
If you would invest 2.50 in Group 6 Metals on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Group 6 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 |
Group 6 Metals vs. American West Metals
Performance |
| Timeline |
| Group 6 Metals |
| American West Metals |
Group 6 and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 6 and American West
The main advantage of trading using opposite Group 6 and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 6 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.| Group 6 vs. Northern Star Resources | Group 6 vs. Evolution Mining | Group 6 vs. Bluescope Steel | Group 6 vs. Sandfire Resources NL |
| American West vs. Westpac Banking | American West vs. Pinnacle Investment Management | American West vs. Wt Financial Group | American West vs. Regal Funds Management |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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