Correlation Between American Hotel and Arbor Metals
Can any of the company-specific risk be diversified away by investing in both American Hotel 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 American Hotel and Arbor Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Hotel Income and Arbor Metals Corp, you can compare the effects of market volatilities on American Hotel 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 American Hotel with a short position of Arbor Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Hotel and Arbor Metals.
Diversification Opportunities for American Hotel and Arbor Metals
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Arbor is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding American Hotel Income 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 American Hotel 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 American Hotel Income 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 American Hotel i.e., American Hotel and Arbor Metals go up and down completely randomly.
Pair Corralation between American Hotel and Arbor Metals
Assuming the 90 days trading horizon American Hotel Income is expected to generate 0.76 times more return on investment than Arbor Metals. However, American Hotel Income is 1.32 times less risky than Arbor Metals. It trades about -0.2 of its potential returns per unit of risk. Arbor Metals Corp is currently generating about -0.45 per unit of risk. If you would invest 72.00 in American Hotel Income on November 27, 2024 and sell it today you would lose (9.00) from holding American Hotel Income or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Hotel Income vs. Arbor Metals Corp
Performance |
| Timeline |
| American Hotel Income |
| Arbor Metals Corp |
American Hotel and Arbor Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Hotel and Arbor Metals
The main advantage of trading using opposite American Hotel and Arbor Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Hotel 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.| American Hotel vs. Applied Materials, | American Hotel vs. Nova Leap Health | American Hotel vs. Bird Construction | American Hotel vs. NeuPath Health |
| Arbor Metals vs. Kiplin Metals | Arbor Metals vs. Pure Energy Minerals | Arbor Metals vs. Noram Lithium Corp | Arbor Metals vs. Minnova 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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