Correlation Between Ramaco Resources and Warrior Met
Can any of the company-specific risk be diversified away by investing in both Ramaco Resources and Warrior Met 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 Ramaco Resources and Warrior Met into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ramaco Resources and Warrior Met Coal, you can compare the effects of market volatilities on Ramaco Resources and Warrior Met 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 Ramaco Resources with a short position of Warrior Met. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ramaco Resources and Warrior Met.
Diversification Opportunities for Ramaco Resources and Warrior Met
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ramaco and Warrior is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ramaco Resources and Warrior Met Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warrior Met Coal and Ramaco Resources 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 Ramaco Resources are associated (or correlated) with Warrior Met. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warrior Met Coal has no effect on the direction of Ramaco Resources i.e., Ramaco Resources and Warrior Met go up and down completely randomly.
Pair Corralation between Ramaco Resources and Warrior Met
Given the investment horizon of 90 days Ramaco Resources is expected to generate 1.33 times more return on investment than Warrior Met. However, Ramaco Resources is 1.33 times more volatile than Warrior Met Coal. It trades about 0.27 of its potential returns per unit of risk. Warrior Met Coal is currently generating about 0.26 per unit of risk. If you would invest 1,036 in Ramaco Resources on August 23, 2024 and sell it today you would earn a total of 279.00 from holding Ramaco Resources or generate 26.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ramaco Resources vs. Warrior Met Coal
Performance |
| Timeline |
| Ramaco Resources |
| Warrior Met Coal |
Ramaco Resources and Warrior Met Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ramaco Resources and Warrior Met
The main advantage of trading using opposite Ramaco Resources and Warrior Met positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ramaco Resources position performs unexpectedly, Warrior Met 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 Warrior Met will offset losses from the drop in Warrior Met's long position.| Ramaco Resources vs. Warrior Met Coal | Ramaco Resources vs. Arch Resources | Ramaco Resources vs. Alpha Metallurgical Resources | Ramaco Resources vs. American Resources Corp |
| Warrior Met vs. SunCoke Energy | Warrior Met vs. Arch Resources | Warrior Met vs. Alpha Metallurgical Resources | Warrior Met vs. American Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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