Correlation Between All American and Access Power

Can any of the company-specific risk be diversified away by investing in both All American and Access Power 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 All American and Access Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between All American Gld and Access Power Co, you can compare the effects of market volatilities on All American and Access Power 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 All American with a short position of Access Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of All American and Access Power.

Diversification Opportunities for All American and Access Power

-0.04

Correlation Coefficient

All American  Access Power

Good diversification

The 3 months correlation between All and Access is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding All American Gld and Access Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Access Power and All American 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 All American Gld are associated (or correlated) with Access Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Access Power has no effect on the direction of All American i.e., All American and Access Power go up and down completely randomly.

Pair Corralation between All American and Access Power

Given the investment horizon of 90 days All American is expected to generate 5.14 times less return on investment than Access Power. But when comparing it to its historical volatility, All American Gld is 3.66 times less risky than Access Power. It trades about 0.08 of its potential returns per unit of risk. Access Power Co is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.11  in Access Power Co on September 9, 2024 and sell it today you would lose (0.02) from holding Access Power Co or give up 18.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

All American Gld  vs.  Access Power Co

All American Gld

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in All American Gld are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, All American exhibited solid returns over the last few months and may actually be approaching a breakup point.

Access Power

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Access Power Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental indicators, Access Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with All American and Access Power

The main advantage of trading using opposite All American and Access Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if All American position performs unexpectedly, Access Power 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 Access Power will offset losses from the drop in Access Power's long position.

The idea behind All American Gld and Access Power Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.