Correlation Between Southern Hemisphere and Arc Funds
Can any of the company-specific risk be diversified away by investing in both Southern Hemisphere and Arc Funds 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 Southern Hemisphere and Arc Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Hemisphere Mining and Arc Funds, you can compare the effects of market volatilities on Southern Hemisphere and Arc Funds 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 Southern Hemisphere with a short position of Arc Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Hemisphere and Arc Funds.
Diversification Opportunities for Southern Hemisphere and Arc Funds
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Southern and Arc is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Southern Hemisphere Mining and Arc Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arc Funds and Southern Hemisphere 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 Southern Hemisphere Mining are associated (or correlated) with Arc Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arc Funds has no effect on the direction of Southern Hemisphere i.e., Southern Hemisphere and Arc Funds go up and down completely randomly.
Pair Corralation between Southern Hemisphere and Arc Funds
Assuming the 90 days trading horizon Southern Hemisphere is expected to generate 1.56 times less return on investment than Arc Funds. In addition to that, Southern Hemisphere is 1.85 times more volatile than Arc Funds. It trades about 0.17 of its total potential returns per unit of risk. Arc Funds is currently generating about 0.48 per unit of volatility. If you would invest 9.40 in Arc Funds on November 5, 2024 and sell it today you would earn a total of 3.60 from holding Arc Funds or generate 38.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern Hemisphere Mining vs. Arc Funds
Performance |
| Timeline |
| Southern Hemisphere |
| Arc Funds |
Southern Hemisphere and Arc Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Hemisphere and Arc Funds
The main advantage of trading using opposite Southern Hemisphere and Arc Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Hemisphere position performs unexpectedly, Arc Funds 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 Arc Funds will offset losses from the drop in Arc Funds' long position.| Southern Hemisphere vs. Northern Star Resources | Southern Hemisphere vs. Evolution Mining | Southern Hemisphere vs. Bluescope Steel | Southern Hemisphere vs. De Grey Mining |
| Arc Funds vs. Black Rock Mining | Arc Funds vs. 4Dmedical | Arc Funds vs. 29Metals | Arc Funds vs. Aurelia 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |