Correlation Between Sandfire Resources and American West
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources and American West 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 Sandfire Resources and American West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandfire Resources NL and American West Metals, you can compare the effects of market volatilities on Sandfire Resources and American West 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 Sandfire Resources with a short position of American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and American West.
Diversification Opportunities for Sandfire Resources and American West
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sandfire and American is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources NL and American West Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American West Metals and Sandfire 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 Sandfire Resources NL are associated (or correlated) with American West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American West Metals has no effect on the direction of Sandfire Resources i.e., Sandfire Resources and American West go up and down completely randomly.
Pair Corralation between Sandfire Resources and American West
Assuming the 90 days trading horizon Sandfire Resources NL is expected to generate 0.37 times more return on investment than American West. However, Sandfire Resources NL is 2.73 times less risky than American West. It trades about 0.1 of its potential returns per unit of risk. American West Metals is currently generating about 0.0 per unit of risk. If you would invest 606.00 in Sandfire Resources NL on August 25, 2024 and sell it today you would earn a total of 421.00 from holding Sandfire Resources NL or generate 69.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources NL vs. American West Metals
Performance |
| Timeline |
| Sandfire Resources |
| American West Metals |
Sandfire Resources and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and American West
The main advantage of trading using opposite Sandfire Resources and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources position performs unexpectedly, American West 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 American West will offset losses from the drop in American West's long position.| Sandfire Resources vs. Hudson Investment Group | Sandfire Resources vs. Argo Investments | Sandfire Resources vs. Regal Investment | Sandfire Resources vs. Spirit Telecom |
| American West vs. Northern Star Resources | American West vs. Evolution Mining | American West vs. Bluescope Steel | American West vs. Sandfire Resources NL |
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.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |