Correlation Between Sky Metals and American West
Can any of the company-specific risk be diversified away by investing in both Sky Metals 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 Sky Metals and American West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and American West Metals, you can compare the effects of market volatilities on Sky Metals 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 Sky Metals with a short position of American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and American West.
Diversification Opportunities for Sky Metals and American West
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sky and American is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals 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 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 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 Sky Metals i.e., Sky Metals and American West go up and down completely randomly.
Pair Corralation between Sky Metals and American West
Assuming the 90 days trading horizon Sky Metals is expected to generate 1.16 times less return on investment than American West. But when comparing it to its historical volatility, Sky Metals is 1.36 times less risky than American West. It trades about 0.03 of its potential returns per unit of risk. American West Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11.00 in American West Metals on August 26, 2024 and sell it today you would lose (4.40) from holding American West Metals or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.67% |
| Values | Daily Returns |
Sky Metals vs. American West Metals
Performance |
| Timeline |
| Sky Metals |
| American West Metals |
Sky Metals and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and American West
The main advantage of trading using opposite Sky Metals and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals 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.| Sky Metals vs. REGAL ASIAN INVESTMENTS | Sky Metals vs. Aurelia Metals | Sky Metals vs. A1 Investments Resources | Sky Metals vs. Hudson Investment Group |
| American West vs. Mach7 Technologies | American West vs. Super Retail Group | American West vs. RLF AgTech | American West vs. Infomedia |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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