Correlation Between Strickland Metals and ACDC Metals
Can any of the company-specific risk be diversified away by investing in both Strickland 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 Strickland 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 Strickland Metals and ACDC Metals, you can compare the effects of market volatilities on Strickland 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 Strickland Metals with a short position of ACDC Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strickland Metals and ACDC Metals.
Diversification Opportunities for Strickland Metals and ACDC Metals
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Strickland and ACDC is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Strickland Metals and ACDC Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACDC Metals and Strickland 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 Strickland 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 Strickland Metals i.e., Strickland Metals and ACDC Metals go up and down completely randomly.
Pair Corralation between Strickland Metals and ACDC Metals
Assuming the 90 days trading horizon Strickland Metals is expected to generate 1.65 times more return on investment than ACDC Metals. However, Strickland Metals is 1.65 times more volatile than ACDC Metals. It trades about 0.14 of its potential returns per unit of risk. ACDC Metals is currently generating about -0.41 per unit of risk. If you would invest 6.60 in Strickland Metals on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Strickland Metals or generate 15.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strickland Metals vs. ACDC Metals
Performance |
| Timeline |
| Strickland Metals |
| ACDC Metals |
Strickland Metals and ACDC Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strickland Metals and ACDC Metals
The main advantage of trading using opposite Strickland Metals and ACDC Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strickland 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.| Strickland Metals vs. Hudson Investment Group | Strickland Metals vs. Diversified United Investment | Strickland Metals vs. Aussie Broadband | Strickland Metals vs. Australian Unity Office |
| ACDC Metals vs. Northern Star Resources | ACDC Metals vs. Evolution Mining | ACDC Metals vs. Bluescope Steel | ACDC Metals vs. De Grey Mining |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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