Correlation Between Sky Metals and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Sky Metals and ACDC 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 Sky Metals and ACDC Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and ACDC Metals, you can compare the effects of market volatilities on Sky Metals and ACDC 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 Sky Metals with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and ACDC Metals.
Diversification Opportunities for Sky Metals and ACDC Metals
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sky and ACDC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Sky Metals 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 Sky Metals are associated (or correlated) with ACDC Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACDC Metals has no effect on the direction of Sky Metals i.e., Sky Metals and ACDC Metals go up and down completely randomly.
Pair Corralation between Sky Metals and ACDC Metals
Assuming the 90 days trading horizon Sky Metals is expected to generate 1.47 times more return on investment than ACDC Metals. However, Sky Metals is 1.47 times more volatile than ACDC Metals. It trades about -0.04 of its potential returns per unit of risk. ACDC Metals is currently generating about -0.34 per unit of risk. If you would invest 5.50 in Sky Metals on August 28, 2024 and sell it today you would lose (0.30) from holding Sky Metals or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sky Metals vs. ACDC Metals
Performance |
| Timeline |
| Sky Metals |
| ACDC Metals |
Sky Metals and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and ACDC Metals
The main advantage of trading using opposite Sky Metals and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, ACDC 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 ACDC Metals will offset losses from the drop in ACDC Metals' long position.| Sky Metals vs. Northern Star Resources | Sky Metals vs. Evolution Mining | Sky Metals vs. Bluescope Steel | Sky Metals vs. Sandfire Resources NL |
| ACDC Metals vs. Clime Investment Management | ACDC Metals vs. Flagship Investments | ACDC Metals vs. Centaurus Metals | ACDC Metals vs. BKI Investment |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |