Correlation Between Stelar Metals and American West
Can any of the company-specific risk be diversified away by investing in both Stelar 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 Stelar 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 Stelar Metals and American West Metals, you can compare the effects of market volatilities on Stelar 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 Stelar Metals with a short position of American West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stelar Metals and American West.
Diversification Opportunities for Stelar Metals and American West
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stelar and American is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Stelar 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 Stelar 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 Stelar 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 Stelar Metals i.e., Stelar Metals and American West go up and down completely randomly.
Pair Corralation between Stelar Metals and American West
Assuming the 90 days trading horizon Stelar Metals is expected to generate 0.99 times more return on investment than American West. However, Stelar Metals is 1.01 times less risky than American West. It trades about -0.2 of its potential returns per unit of risk. American West Metals is currently generating about -0.34 per unit of risk. If you would invest 8.00 in Stelar Metals on August 26, 2024 and sell it today you would lose (1.00) from holding Stelar Metals or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stelar Metals vs. American West Metals
Performance |
| Timeline |
| Stelar Metals |
| American West Metals |
Stelar Metals and American West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stelar Metals and American West
The main advantage of trading using opposite Stelar Metals and American West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stelar 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.| Stelar Metals vs. Aurelia Metals | Stelar Metals vs. Thorney Technologies | Stelar Metals vs. Autosports Group | Stelar Metals vs. Ras Technology Holdings |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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