Correlation Between American Pacific and Arizona Metals
Can any of the company-specific risk be diversified away by investing in both American Pacific and Arizona 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 American Pacific and Arizona Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Pacific Mining and Arizona Metals Corp, you can compare the effects of market volatilities on American Pacific and Arizona 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 American Pacific with a short position of Arizona Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Pacific and Arizona Metals.
Diversification Opportunities for American Pacific and Arizona Metals
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Arizona is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Pacific Mining and Arizona Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arizona Metals Corp and American Pacific 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 American Pacific Mining are associated (or correlated) with Arizona Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arizona Metals Corp has no effect on the direction of American Pacific i.e., American Pacific and Arizona Metals go up and down completely randomly.
Pair Corralation between American Pacific and Arizona Metals
Assuming the 90 days horizon American Pacific Mining is expected to generate 1.59 times more return on investment than Arizona Metals. However, American Pacific is 1.59 times more volatile than Arizona Metals Corp. It trades about 0.01 of its potential returns per unit of risk. Arizona Metals Corp is currently generating about -0.01 per unit of risk. If you would invest 24.00 in American Pacific Mining on August 29, 2024 and sell it today you would lose (6.00) from holding American Pacific Mining or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Pacific Mining vs. Arizona Metals Corp
Performance |
| Timeline |
| American Pacific Mining |
| Arizona Metals Corp |
American Pacific and Arizona Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Pacific and Arizona Metals
The main advantage of trading using opposite American Pacific and Arizona Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Pacific position performs unexpectedly, Arizona 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 Arizona Metals will offset losses from the drop in Arizona Metals' long position.| American Pacific vs. Westward Gold | American Pacific vs. Heliostar Metals | American Pacific vs. Revival Gold | American Pacific vs. Cabral Gold |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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