Correlation Between Stampede Drilling and Arizona Metals
Can any of the company-specific risk be diversified away by investing in both Stampede Drilling and Arizona 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 Stampede Drilling and Arizona Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stampede Drilling and Arizona Metals Corp, you can compare the effects of market volatilities on Stampede Drilling and Arizona 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 Stampede Drilling with a short position of Arizona Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stampede Drilling and Arizona Metals.
Diversification Opportunities for Stampede Drilling and Arizona Metals
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stampede and Arizona is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Stampede Drilling and Arizona Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Metals Corp and Stampede 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 Stampede Drilling are associated (or correlated) with Arizona Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Metals Corp has no effect on the direction of Stampede Drilling i.e., Stampede Drilling and Arizona Metals go up and down completely randomly.
Pair Corralation between Stampede Drilling and Arizona Metals
Assuming the 90 days horizon Stampede Drilling is expected to under-perform the Arizona Metals. But the stock apears to be less risky and, when comparing its historical volatility, Stampede Drilling is 1.77 times less risky than Arizona Metals. The stock trades about -0.13 of its potential returns per unit of risk. The Arizona Metals Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 159.00 in Arizona Metals Corp on September 5, 2024 and sell it today you would earn a total of 8.00 from holding Arizona Metals Corp or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stampede Drilling vs. Arizona Metals Corp
Performance |
| Timeline |
| Stampede Drilling |
| Arizona Metals Corp |
Stampede Drilling and Arizona Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stampede Drilling and Arizona Metals
The main advantage of trading using opposite Stampede Drilling and Arizona Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stampede Drilling position performs unexpectedly, Arizona 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 Arizona Metals will offset losses from the drop in Arizona Metals' long position.| Stampede Drilling vs. STEP Energy Services | Stampede Drilling vs. Southern Energy Corp | Stampede Drilling vs. PHX Energy Services |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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