Correlation Between North American and GREENX METALS
Can any of the company-specific risk be diversified away by investing in both North American and GREENX 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 North American and GREENX METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Construction and GREENX METALS LTD, you can compare the effects of market volatilities on North American and GREENX 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 North American with a short position of GREENX METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and GREENX METALS.
Diversification Opportunities for North American and GREENX METALS
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between North and GREENX is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding North American Construction and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD and North American 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 North American Construction are associated (or correlated) with GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of North American i.e., North American and GREENX METALS go up and down completely randomly.
Pair Corralation between North American and GREENX METALS
Assuming the 90 days horizon North American Construction is expected to generate 0.6 times more return on investment than GREENX METALS. However, North American Construction is 1.68 times less risky than GREENX METALS. It trades about 0.04 of its potential returns per unit of risk. GREENX METALS LTD is currently generating about 0.02 per unit of risk. If you would invest 1,252 in North American Construction on October 16, 2024 and sell it today you would earn a total of 698.00 from holding North American Construction or generate 55.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Construction vs. GREENX METALS LTD
Performance |
| Timeline |
| North American Const |
| GREENX METALS LTD |
North American and GREENX METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and GREENX METALS
The main advantage of trading using opposite North American and GREENX METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, GREENX 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 GREENX METALS will offset losses from the drop in GREENX METALS's long position.| North American vs. UNITED RENTALS | North American vs. BG Foods | North American vs. Cal Maine Foods | North American vs. Lamar Advertising |
| GREENX METALS vs. North American Construction | GREENX METALS vs. GungHo Online Entertainment | GREENX METALS vs. TITAN MACHINERY | GREENX METALS vs. SALESFORCE INC CDR |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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