Correlation Between Arbor Metals and Bombardier

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Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Bombardier 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 Arbor Metals and Bombardier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbor Metals Corp and Bombardier, you can compare the effects of market volatilities on Arbor Metals and Bombardier 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 Arbor Metals with a short position of Bombardier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Bombardier.

Diversification Opportunities for Arbor Metals and Bombardier

ArborBombardierDiversified AwayArborBombardierDiversified Away100%
-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Arbor and Bombardier is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and Arbor 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 Arbor Metals Corp are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of Arbor Metals i.e., Arbor Metals and Bombardier go up and down completely randomly.

Pair Corralation between Arbor Metals and Bombardier

Assuming the 90 days horizon Arbor Metals Corp is expected to generate 4.14 times more return on investment than Bombardier. However, Arbor Metals is 4.14 times more volatile than Bombardier. It trades about 0.08 of its potential returns per unit of risk. Bombardier is currently generating about -0.05 per unit of risk. If you would invest  36.00  in Arbor Metals Corp on November 20, 2024 and sell it today you would earn a total of  5.00  from holding Arbor Metals Corp or generate 13.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Arbor Metals Corp  vs.  Bombardier

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 050100
JavaScript chart by amCharts 3.21.15ABR BBD-B
       Timeline  
Arbor Metals Corp 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Metals Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Arbor Metals showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.30.40.50.60.70.80.9
Bombardier 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Bombardier has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7580859095100105

Arbor Metals and Bombardier Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-38.48-28.82-19.16-9.50.09.8519.8729.8839.9 0.010.020.030.04
JavaScript chart by amCharts 3.21.15ABR BBD-B
       Returns  

Pair Trading with Arbor Metals and Bombardier

The main advantage of trading using opposite Arbor Metals and Bombardier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbor Metals position performs unexpectedly, Bombardier 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 Bombardier will offset losses from the drop in Bombardier's long position.
The idea behind Arbor Metals Corp and Bombardier 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.
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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.

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