Correlation Between Sky Gold and ArcWest Exploration
Can any of the company-specific risk be diversified away by investing in both Sky Gold and ArcWest Exploration 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 Gold and ArcWest Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Gold Corp and ArcWest Exploration, you can compare the effects of market volatilities on Sky Gold and ArcWest Exploration 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 Gold with a short position of ArcWest Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Gold and ArcWest Exploration.
Diversification Opportunities for Sky Gold and ArcWest Exploration
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sky and ArcWest is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sky Gold Corp and ArcWest Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcWest Exploration and Sky Gold 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 Gold Corp are associated (or correlated) with ArcWest Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcWest Exploration has no effect on the direction of Sky Gold i.e., Sky Gold and ArcWest Exploration go up and down completely randomly.
Pair Corralation between Sky Gold and ArcWest Exploration
Assuming the 90 days trading horizon Sky Gold Corp is expected to under-perform the ArcWest Exploration. In addition to that, Sky Gold is 2.11 times more volatile than ArcWest Exploration. It trades about -0.06 of its total potential returns per unit of risk. ArcWest Exploration is currently generating about -0.08 per unit of volatility. If you would invest 8.00 in ArcWest Exploration on August 28, 2024 and sell it today you would lose (1.00) from holding ArcWest Exploration or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sky Gold Corp vs. ArcWest Exploration
Performance |
| Timeline |
| Sky Gold Corp |
| ArcWest Exploration |
Sky Gold and ArcWest Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Gold and ArcWest Exploration
The main advantage of trading using opposite Sky Gold and ArcWest Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Gold position performs unexpectedly, ArcWest Exploration 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 ArcWest Exploration will offset losses from the drop in ArcWest Exploration's long position.| Sky Gold vs. First Majestic Silver | Sky Gold vs. Ivanhoe Energy | Sky Gold vs. Orezone Gold Corp | Sky Gold vs. Faraday Copper Corp |
| ArcWest Exploration vs. First Majestic Silver | ArcWest Exploration vs. Ivanhoe Energy | ArcWest Exploration vs. Orezone Gold Corp | ArcWest Exploration vs. Faraday Copper 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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