Correlation Between SunCoke Energy and American Resources
Can any of the company-specific risk be diversified away by investing in both SunCoke Energy and American Resources 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 SunCoke Energy and American Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SunCoke Energy and American Resources Corp, you can compare the effects of market volatilities on SunCoke Energy and American Resources 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 SunCoke Energy with a short position of American Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of SunCoke Energy and American Resources.
Diversification Opportunities for SunCoke Energy and American Resources
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SunCoke and American is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding SunCoke Energy and American Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Resources Corp and SunCoke Energy 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 SunCoke Energy are associated (or correlated) with American Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Resources Corp has no effect on the direction of SunCoke Energy i.e., SunCoke Energy and American Resources go up and down completely randomly.
Pair Corralation between SunCoke Energy and American Resources
Considering the 90-day investment horizon SunCoke Energy is expected to generate 0.42 times more return on investment than American Resources. However, SunCoke Energy is 2.36 times less risky than American Resources. It trades about 0.05 of its potential returns per unit of risk. American Resources Corp is currently generating about 0.02 per unit of risk. If you would invest 1,036 in SunCoke Energy on August 27, 2024 and sell it today you would earn a total of 236.00 from holding SunCoke Energy or generate 22.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SunCoke Energy vs. American Resources Corp
Performance |
| Timeline |
| SunCoke Energy |
| American Resources Corp |
SunCoke Energy and American Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SunCoke Energy and American Resources
The main advantage of trading using opposite SunCoke Energy and American Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SunCoke Energy position performs unexpectedly, American Resources 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 Resources will offset losses from the drop in American Resources' long position.| SunCoke Energy vs. Warrior Met Coal | SunCoke Energy vs. Arch Resources | SunCoke Energy vs. Alpha Metallurgical Resources | SunCoke Energy vs. American Resources Corp |
| American Resources vs. Westwater Resources | American Resources vs. Aqua Metals | American Resources vs. Pioneer Power Solutions | American Resources vs. Hall of Fame |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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