Correlation Between Arbor Metals and Boat Rocker

Can any of the company-specific risk be diversified away by investing in both Arbor Metals and Boat Rocker 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 Boat Rocker 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 Boat Rocker Media, you can compare the effects of market volatilities on Arbor Metals and Boat Rocker 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 Boat Rocker. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbor Metals and Boat Rocker.

Diversification Opportunities for Arbor Metals and Boat Rocker

0.44

Correlation Coefficient

Arbor Metals  Boat Rocker

Very weak diversification

The 3 months correlation between Arbor and Boat is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Arbor Metals Corp and Boat Rocker Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boat Rocker Media 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 Boat Rocker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boat Rocker Media has no effect on the direction of Arbor Metals i.e., Arbor Metals and Boat Rocker go up and down completely randomly.

Pair Corralation between Arbor Metals and Boat Rocker

Assuming the 90 days horizon Arbor Metals Corp is expected to generate 3.7 times more return on investment than Boat Rocker. However, Arbor Metals is 3.7 times more volatile than Boat Rocker Media. It trades about 0.1 of its potential returns per unit of risk. Boat Rocker Media is currently generating about 0.08 per unit of risk. If you would invest  23.00  in Arbor Metals Corp on December 29, 2024 and sell it today you would earn a total of  9.00  from holding Arbor Metals Corp or generate 39.13% return on investment over 90 days.

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

Arbor Metals Corp  vs.  Boat Rocker Media

Arbor Metals Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arbor Metals Corp are ranked lower than 7 (%) 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.

Boat Rocker Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Boat Rocker Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Boat Rocker displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arbor Metals and Boat Rocker

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

The idea behind Arbor Metals Corp and Boat Rocker Media 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 Global Correlations module to find global opportunities by holding instruments from different markets.