Correlation Between Newbury Street and Algoma Steel
Can any of the company-specific risk be diversified away by investing in both Newbury Street and Algoma Steel 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 Newbury Street and Algoma Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newbury Street Acquisition and Algoma Steel Group, you can compare the effects of market volatilities on Newbury Street and Algoma Steel 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 Newbury Street with a short position of Algoma Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newbury Street and Algoma Steel.
Diversification Opportunities for Newbury Street and Algoma Steel
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Newbury and Algoma is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Newbury Street Acquisition and Algoma Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algoma Steel Group and Newbury Street 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 Newbury Street Acquisition are associated (or correlated) with Algoma Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algoma Steel Group has no effect on the direction of Newbury Street i.e., Newbury Street and Algoma Steel go up and down completely randomly.
Pair Corralation between Newbury Street and Algoma Steel
Assuming the 90 days horizon Newbury Street Acquisition is expected to generate 23.6 times more return on investment than Algoma Steel. However, Newbury Street is 23.6 times more volatile than Algoma Steel Group. It trades about 0.13 of its potential returns per unit of risk. Algoma Steel Group is currently generating about 0.04 per unit of risk. If you would invest 4.00 in Newbury Street Acquisition on August 30, 2024 and sell it today you would earn a total of 5.00 from holding Newbury Street Acquisition or generate 125.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 63.49% |
| Values | Daily Returns |
Newbury Street Acquisition vs. Algoma Steel Group
Performance |
| Timeline |
| Newbury Street Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
| Algoma Steel Group |
Newbury Street and Algoma Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newbury Street and Algoma Steel
The main advantage of trading using opposite Newbury Street and Algoma Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newbury Street position performs unexpectedly, Algoma Steel 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 Algoma Steel will offset losses from the drop in Algoma Steel's long position.The idea behind Newbury Street Acquisition and Algoma Steel Group 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.| Algoma Steel vs. Algoma Steel Group | Algoma Steel vs. Evolv Technologies Holdings | Algoma Steel vs. Valens Semiconductor |
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 Stocks Directory module to find actively traded stocks across global markets.
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