Correlation Between Itron and Auxico Resources
Can any of the company-specific risk be diversified away by investing in both Itron and Auxico Resources 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 Itron and Auxico Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Itron Inc and Auxico Resources Canada, you can compare the effects of market volatilities on Itron and Auxico Resources 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 Itron with a short position of Auxico Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itron and Auxico Resources.
Diversification Opportunities for Itron and Auxico Resources
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Itron and Auxico is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and Auxico Resources Canada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auxico Resources Canada and Itron 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 Itron Inc are associated (or correlated) with Auxico Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auxico Resources Canada has no effect on the direction of Itron i.e., Itron and Auxico Resources go up and down completely randomly.
Pair Corralation between Itron and Auxico Resources
Given the investment horizon of 90 days Itron is expected to generate 30.1 times less return on investment than Auxico Resources. But when comparing it to its historical volatility, Itron Inc is 49.91 times less risky than Auxico Resources. It trades about 0.24 of its potential returns per unit of risk. Auxico Resources Canada is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1.50 in Auxico Resources Canada on August 29, 2024 and sell it today you would lose (0.90) from holding Auxico Resources Canada or give up 60.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Itron Inc vs. Auxico Resources Canada
Performance |
| Timeline |
| Itron Inc |
| Auxico Resources Canada |
Itron and Auxico Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Itron and Auxico Resources
The main advantage of trading using opposite Itron and Auxico Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Itron position performs unexpectedly, Auxico Resources 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 Auxico Resources will offset losses from the drop in Auxico Resources' long position.The idea behind Itron Inc and Auxico Resources Canada pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Auxico Resources vs. Mirasol Resources | Auxico Resources vs. Clean Air Metals | Auxico Resources vs. Equity Metals |
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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