Correlation Between Minera Alamos and Rio2
Can any of the company-specific risk be diversified away by investing in both Minera Alamos and Rio2 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 Minera Alamos and Rio2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Minera Alamos and Rio2, you can compare the effects of market volatilities on Minera Alamos and Rio2 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 Minera Alamos with a short position of Rio2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minera Alamos and Rio2.
Diversification Opportunities for Minera Alamos and Rio2
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Minera and Rio2 is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Minera Alamos and Rio2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio2 and Minera Alamos 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 Minera Alamos are associated (or correlated) with Rio2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio2 has no effect on the direction of Minera Alamos i.e., Minera Alamos and Rio2 go up and down completely randomly.
Pair Corralation between Minera Alamos and Rio2
Assuming the 90 days horizon Minera Alamos is not expected to generate positive returns. However, Minera Alamos is 1.23 times less risky than Rio2. It waists most of its returns potential to compensate for thr risk taken. Rio2 is generating about 0.09 per unit of risk. If you would invest 19.00 in Rio2 on August 26, 2024 and sell it today you would earn a total of 49.00 from holding Rio2 or generate 257.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Minera Alamos vs. Rio2
Performance |
| Timeline |
| Minera Alamos |
| Rio2 |
Minera Alamos and Rio2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Minera Alamos and Rio2
The main advantage of trading using opposite Minera Alamos and Rio2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minera Alamos position performs unexpectedly, Rio2 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 Rio2 will offset losses from the drop in Rio2's long position.| Minera Alamos vs. First Majestic Silver | Minera Alamos vs. Ivanhoe Energy | Minera Alamos vs. Orezone Gold Corp | Minera Alamos vs. Faraday Copper Corp |
| Rio2 vs. Minera Alamos | Rio2 vs. Integra Resources Corp | Rio2 vs. Liberty Gold Corp | Rio2 vs. Silver One Resources |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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