Correlation Between Sierra Madre and Western Alaska
Can any of the company-specific risk be diversified away by investing in both Sierra Madre and Western Alaska 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 Sierra Madre and Western Alaska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sierra Madre Gold and Western Alaska Minerals, you can compare the effects of market volatilities on Sierra Madre and Western Alaska 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 Sierra Madre with a short position of Western Alaska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra Madre and Western Alaska.
Diversification Opportunities for Sierra Madre and Western Alaska
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sierra and Western is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Madre Gold and Western Alaska Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Alaska Minerals and Sierra Madre 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 Sierra Madre Gold are associated (or correlated) with Western Alaska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Alaska Minerals has no effect on the direction of Sierra Madre i.e., Sierra Madre and Western Alaska go up and down completely randomly.
Pair Corralation between Sierra Madre and Western Alaska
Assuming the 90 days horizon Sierra Madre Gold is expected to generate 1.12 times more return on investment than Western Alaska. However, Sierra Madre is 1.12 times more volatile than Western Alaska Minerals. It trades about 0.18 of its potential returns per unit of risk. Western Alaska Minerals is currently generating about 0.11 per unit of risk. If you would invest 32.00 in Sierra Madre Gold on November 3, 2024 and sell it today you would earn a total of 7.00 from holding Sierra Madre Gold or generate 21.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sierra Madre Gold vs. Western Alaska Minerals
Performance |
| Timeline |
| Sierra Madre Gold |
| Western Alaska Minerals |
Sierra Madre and Western Alaska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sierra Madre and Western Alaska
The main advantage of trading using opposite Sierra Madre and Western Alaska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Madre position performs unexpectedly, Western Alaska 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 Western Alaska will offset losses from the drop in Western Alaska's long position.| Sierra Madre vs. Equity Metals | Sierra Madre vs. Silver Wolf Exploration | Sierra Madre vs. Western Alaska Minerals | Sierra Madre vs. Summa Silver Corp |
| Western Alaska vs. First Tellurium Corp | Western Alaska vs. Max Resource Corp | Western Alaska vs. P2 Gold | Western Alaska vs. CMC Metals |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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