Correlation Between Opus One and Arbor Metals
Can any of the company-specific risk be diversified away by investing in both Opus One and Arbor 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 Opus One and Arbor Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Opus One Resources and Arbor Metals Corp, you can compare the effects of market volatilities on Opus One and Arbor 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 Opus One with a short position of Arbor Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Opus One and Arbor Metals.
Diversification Opportunities for Opus One and Arbor Metals
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Opus and Arbor is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Opus One Resources and Arbor Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbor Metals Corp and Opus One 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 Opus One Resources are associated (or correlated) with Arbor Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbor Metals Corp has no effect on the direction of Opus One i.e., Opus One and Arbor Metals go up and down completely randomly.
Pair Corralation between Opus One and Arbor Metals
Assuming the 90 days horizon Opus One Resources is expected to generate 2.88 times more return on investment than Arbor Metals. However, Opus One is 2.88 times more volatile than Arbor Metals Corp. It trades about 0.08 of its potential returns per unit of risk. Arbor Metals Corp is currently generating about -0.09 per unit of risk. If you would invest 3.00 in Opus One Resources on September 12, 2024 and sell it today you would earn a total of 2.00 from holding Opus One Resources or generate 66.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Opus One Resources vs. Arbor Metals Corp
Performance |
| Timeline |
| Opus One Resources |
| Arbor Metals Corp |
Opus One and Arbor Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Opus One and Arbor Metals
The main advantage of trading using opposite Opus One and Arbor Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Opus One position performs unexpectedly, Arbor 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 Arbor Metals will offset losses from the drop in Arbor Metals' long position.| Opus One vs. Major Drilling Group | Opus One vs. High Liner Foods | Opus One vs. Computer Modelling Group | Opus One vs. Brookfield Asset Management |
| Arbor Metals vs. Kiplin Metals | Arbor Metals vs. Pure Energy Minerals | Arbor Metals vs. Noram Lithium Corp | Arbor Metals vs. Minnova 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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