Correlation Between Major Drilling and Aclara Resources
Can any of the company-specific risk be diversified away by investing in both Major Drilling and Aclara 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 Major Drilling and Aclara Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Aclara Resources, you can compare the effects of market volatilities on Major Drilling and Aclara 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 Major Drilling with a short position of Aclara Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Aclara Resources.
Diversification Opportunities for Major Drilling and Aclara Resources
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Major and Aclara is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Aclara Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aclara Resources and Major Drilling 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 Major Drilling Group are associated (or correlated) with Aclara Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aclara Resources has no effect on the direction of Major Drilling i.e., Major Drilling and Aclara Resources go up and down completely randomly.
Pair Corralation between Major Drilling and Aclara Resources
Assuming the 90 days trading horizon Major Drilling Group is expected to under-perform the Aclara Resources. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 8.32 times less risky than Aclara Resources. The stock trades about -0.44 of its potential returns per unit of risk. The Aclara Resources is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Aclara Resources on October 7, 2024 and sell it today you would earn a total of 8.00 from holding Aclara Resources or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Aclara Resources
Performance |
| Timeline |
| Major Drilling Group |
| Aclara Resources |
Major Drilling and Aclara Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Aclara Resources
The main advantage of trading using opposite Major Drilling and Aclara Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, Aclara 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 Aclara Resources will offset losses from the drop in Aclara Resources' long position.| Major Drilling vs. Pason Systems | Major Drilling vs. HudBay Minerals | Major Drilling vs. Ensign Energy Services | Major Drilling vs. Precision Drilling |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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